Shares hit record high after figure is much higher than expected, with total revenue climbing 44.8% thanks to increased mobile video ad sales

This article is more than 3 years old

This article is more than 3 years old

Facebook has delivered a much higher-than-expected quarterly profit, driven by a sharp increase in sales of mobile video ads, sending its shares to an all-time high.

Total revenue rose 44.8% to $9.32bn from the same period in 2016, of which Facebook posted a profit of $3.89bn – up a whopping 71% from the year before.

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“We had a good second quarter and first half of the year. Our community is now two billion people and we’re focusing on bringing the world closer together,” said Facebook’s CEO, Mark Zuckerberg.

Mobile ad revenue accounted for 87% of the company’s total advertising revenue of $9.16 billion in the latest quarter, up from 84% a year earlier.

The boost came from increasing monetisation of video within the Facebook News Feed, as well as growth in the Facebook-owned Instagram.

Facebook has not said how much of its revenue is attributable to its Instagram unit, though the photo-sharing app has become a greater focus of its business.

“Clearly, the biggest driver of growth is, overall, Facebook News Feed,” chief financial officer David Wehner said. “Instagram is making a contribution, and an increasing contribution.”

Facebook, along with Google, takes the lion’s share of online advertising revenue – 99% of all new dollars spent last year, according to Pivotal Research. However, Facebook’s news feed is reaching saturation point so the company will have to sell more ads elsewhere or see a slowdown in growth.

Facebook still has plenty of room to grow, revenue-wise. It’s only just started inserting ads into Messenger and it’s experimenting with ad breaks inserted into videos. The company has also launched classified ads in its Marketplace feature, where users can buy and sell items from each other.

The company is also investing in original TV-style programming to feature in the Facebook mobile app, which could encourage users to spend more time on the platform, in turn allowing Facebook to sell more advertising.

During the earnings call, Zuckerberg revealed that WhatsApp had grown to 1.3 billion monthly users, a billion of whom use the messaging service daily. WhatsApp Status, its little-publicised version of Snapchat Stories that launched six months ago, now has more than 250m daily users – the second Facebook-created Snapchat Stories clone to eclipse Snapchat, after Instagram Stories. Snapchat has just 166m daily active users.

Snapchat was a thorn in Facebook’s side for many years, but the smaller competitor hasn’t been able to keep up with the social network’s relentless copying of its core features.

Facebook is expected to generate $36.29 billion in net digital ad revenue this year, a 35% jump from 2016, according to the research firm eMarketer.

Facebook said about 2.01 billion people were using its service monthly as of June 30, up 17% from a year earlier. About 1.3 billion of them use the service every day, said Facebook.