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Category: Information and Communication / Social Media / Media / Internet Culture

Facebook profits surge as user base grows

Thursday, 28 Apr 2016 10:13:50

Company chief Mark Zuckerberg said the social media giant had a "great start to the year". (Reuters: Robert Galbraith)

Facebook has reported a powerful surge in profits as the user base of the leading social network continues to climb.

Key Points

  • Daily active users of Facebook climbed 16 per cent to 1.09 billion
  • Revenue from advertising soared 57 per cent in the quarter
  • Market trackers predict Facebook to capture $10.2 billion advertising revenue this year

Profit in the first quarter tripled from a year ago to $1.5 billion as revenue jumped to $5.4 billion from $3.5 billion in the same period a year earlier.

"We had a great start to the year," Facebook co-founder and chief executive Mark Zuckerberg said.

The key metric of monthly active users rose to 1.65 billion, up 15 per cent from a year ago. And those using Facebook daily rose 16 per cent to 1.09 billion, with strong gains in numbers of people using mobile devices.

The report shows Facebook is using its dominant position in social media to boost advertising revenues as it connects more people with new services such as live video.

Facebook also announced that its board of directors has approved a plan to create a non-voting class of stock intended to raise capital, leaving Mr Zuckerberg in control of the company's vision and direction.

Shareholders will get to vote on the proposal at an annual stockholders meeting on June 20, Facebook said.

The move aims to allow Mr Zuckerberg to remain in charge even as he gives away the bulk of his holdings to charity, as he announced last year with his wife.

"The board's proposal will allow Facebook to maintain and improve upon the structure that has served shareholders well, while also enabling Mark to pursue his important goals through the Chan Zuckerberg Initiative," a Facebook statement said.

Facebook shares were up more than 9 per cent to $119 in after-market trades that followed release of the earnings report.

Advertising revenues soar

Revenue that the California-based social network took in from advertising alone soared 57 per cent in the quarter.

"Facebook just keeps getting stronger and stronger every quarter. Its share of digital advertising is continuing to grow, and it is steadily adding new revenue streams," eMarketer analyst Debra Aho Williamson said.

"Two years after Facebook rolled out premium ads in the news feed, we see advertisers moving past the experimentation stage and beginning to craft advertising specifically for Facebook — rather than simply repurposing TV spots."

The market tracker forecast that Facebook would capture $10.2 billion in display ad revenue in the US this year to claim 31.2 per cent of the money spent.

Facebook 'on a path toward monetising' Messenger

Mobile was expected to account for the bulk of Facebook's digital ad revenue in the US this year, with Instagram and video formats aimed at smartphones or tablets driving growth.

Facebook has been cautiously optimistic about the potential for money-making advertising on its popular services such as Instagram, Messenger and Live real-time video streaming.

"As we expected, Facebook is putting a lot of emphasis on Messenger this year, and the announcements at f8 earlier this month show that it is on a path toward monetising that service," Ms Williamson said, referring to the social network's annual developers conference.

"Instagram remains popular with advertisers, and the ad rollout appears to be going smoothly among Instagram users."

Facebook has moved beyond its role in social networking to ramp up its messaging platform, and has also moved into virtual reality with its Oculus headsets for which orders have begun.

AFP

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