Facebook smashes earnings with £5.7bn revenue

Still, Facebook did reveal another big quarter, and it generated almost $7 billion in ad sales, and 84% was from mobile devices. Management warned in Facebook’s second-quarter conference call that tough comparisons in the year-ago quarter should cause a deceleration in the key metric going forward. TV ads are a roughly $70 billion market in the USA, according to eMarketer.

The shockingly “bad news” from Wehner is that Facebook this quarter has begun changing the way the company will account for its restricted stock grant and option programs. Facebook shares traded lower in the after-hour session, falling nearly 7%, suggesting that the good news was already priced in. The number of marketers not interested in or unlikely to buy autoplay video ads decreased three points to 31 per cent.

Facebook expected to add fewer adverts and for “ad revenue growth rates [to] come down meaningfully” in 2017, Mr Wehner said on Wednesday.

That, in turn, could give Facebook the opportunity to sell more lucrative video ads and potentially divert dollars from what advertisers now spend on television ads. The company also said it would be hiring aggressively and investing in data centre expansion, even as it reached a limit on how many ads it can show on its properties. Facebook claims that it helped 2 million people register to vote, some of whom were first time voters.

– Mobile advertising revenue represented 84% of advertising revenue for the third quarter of 2016, up from approximately 78% of advertising revenue in the third quarter of 2015. The social network calculates this number based on an “estimation of the geographic location of users when they perform a revenue-generating activity”, which includes any payments for extra services and advertising. Over the past two years we have averaged about 50% compound revenue growth in advertising.

A 3D-printed Facebook logo is seen in front of a displayed stock graph in this illustration taken November 3, 2016. There are 1.79 billion monthly active users, an increase of 16 percent year-over-year. The tech juggernaut now has 1.79 billion users.

Average revenue per user was $4.01 in the third quarter.

“People are creating and sharing more video, and we think it’s pretty clear that video is only going to become more important”, said Zuckerberg.

Chief operating officer Sheryl Sandberg said she believes that ad dollars shift with eyeballs – and Facebook wants to be the best ad dollars that businesses spend in videos.

Facebook also revealed that its push into video, on both Instagram and Facebook itself, is working very well. However, this was slightly offset by a decline in Payments & Other Fees collected in the quarter, which was impacted due to a reduction in games played on the Facebook platform on PCs. Stories are video montages that live at the top of the Instagram feed.

Build a great consumer experience and get it to scale (Facebook does that last part very well).

A big questions investors have for Facebook is when it will start making money from its collection of standalone apps.