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TMT Legal Update - Facebook beats profit forecasts

    • Technology, Media and Telecoms - Technology


    Précis - On 24 July, Facebook reported profits of $333m in the second quarter.

    What? Facebook’s quarter two profit of $333 million, or 13 cents per share compared with a loss of $157 million, or 8 cents per share, in the same quarter last year. The company's sales rose to $1.81bn, a 53% increase from the previous quarter. This figure was a slight increase from the $1.62bn predicted by analysts.

    Facebook reported that a healthy 41% of its total ad revenues were generated via mobile ads. Considering that Facebook only launched mobile ads in 2012, these results are incredibly impressive.

    "We've made good progress growing our community, deepening engagement and delivering strong financial results, especially on mobile," said founder Mark Zuckerberg in a statement. “The work we’ve done to make mobile the best Facebook experience is showing good results and provides us with a solid foundation for the future.”

    So what? When Facebook went public, one of the biggest concerns among the investors was around Facebook’s ability to make money as its users shifted to smartphones. These results show that Facebook can make money despite users shifting to smartphones. It is clear that advertisers consider Facebook a valid advertising platform.

    As a result of the strong financials, Facebook’s stock price has jumped more than 18%.

    From the latest figures we have seen, Google is however still no. 1 when it comes to mobile ads. Whether Facebook can sustain this growth and claim the top spot remains to be seen. But, for now, Mark Zuckerberg and Facebook’s investors have a reason to celebrate.

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