Facebook Inc. surprised investors Wednesday afternoon when it reported $5.382 billion in revenue during the quarter, a 51.9% increase from $3.543 billion in the same quarter of 2014. Of that revenue, 96.6% stemmed from advertising.
Facebook’s revenue translates to 77 cents per share, which is more than 24% more than the 62 cents per share consensus estimate from Yahoo Inc.
In part, that’s thanks to the tremendous amount of time consumers spend on Facebook-owned products, said CEO Mark Zuckerberg during a conference call with analysts. “People around the world spend on average more than 50 minutes a day using Facebook, Instagram, and Messenger, and that doesn’t even include WhatsApp yet,” he said.
During the first quarter, marketers poured $5.201 billion into the social network’s advertising products, a nearly 57% jump from a year earlier. And 82% of that spending, $4.265 billion, was spent on mobile ads. That growth will likely continue, eMarketer Inc. predicts, as the research firm expects Facebook to generate $22.37 billion in ad revenue this year. That would be a 31% jump from the $17.08 billion it generated from ads last year.
“Consumers have shifted to mobile, and businesses know they need to catch up,” said Sheryl Sandberg, Facebook’s chief operating officer. “We hear from marketers that figuring out mobile today is like figuring out TV in its early days. But given where consumers spend their time, the question now is not if they should market on mobile, but how.” Sandberg suggested that the how is online video, which is an area Facebook is making a major push into; Facebook users in the first quarter shared and created nearly three times more video on the social network than they did a year ago. Moreover,consumers watched 40% more videos on Instagram in February than they did over the preceding six months. “This presents a big opportunity for marketers,” she said.
As it reported financial results, Facebook proposed creating a new class of stock that would let consumers buy a share of the company without getting voting rights. The idea is that the new shares would allow Zuckerberg to sell some of his shares without the threat of losing control of the company.
“This proposal is designed to create a capital structure that will, among other things, allow us to remain focused on Mr. Zuckerberg’s long-term vision for our company and encourage Mr. Zuckerberg to remain in an active leadership role at Facebook,” Facebook said in its earnings release.
For the quarter ended March 31, Facebook reported:
- $5.382 billion in total revenue during the quarter, a 51.9% increase from $3.543 billion in the same quarter of 2014.
- $5.201 billion in advertising revenue, a 56.8% increase compared with $3.317 billion.
- Mobile advertising represented approximately 82% of ad revenue during the quarter, up from 73% a year ago. That would indicate mobile ad revenue was approximately $4.265 billion during the quarter, a 76.2% increase compared with $2.421 billion a year earlier.
- $3.21 in average advertising revenue per worldwide user, up 37.2% from $2.34 a year ago. Facebook calculates average revenue per user as its total revenue during a period, divided by the average number of monthly active users at the beginning and the end of the period; that is why the average revenue per user doesn’t equal revenue divided by its number of active users.
- $11.86 in average advertising revenue per user in the U.S. and Canada, up 55.6% from about $7.62 a year ago.
- Net income was $1.510 billion, up 194.9% from $512 million.
- 1.090 billion daily active users, an increase of 16.5% compared with 936 million last year.
- 1.654 billion monthly active users, up 14.8% from 1.441 billion.
- 989 million mobile daily active users, an increase of 23.9% from 798 million.
- 1.508 billion mobile monthly active users, a 20.8% jump from 1.248 billion.
- Of those monthly active users, 894 million accessed Facebook only through mobile apps or mobile versions of its web site. That’s up 53.9% from 581 million.