Facebook Triples Profit As Advertising Revenue Soars

Facebook is reaping the financial rewards from a dramatic shift in advertising spending, which helped it nearly double revenue in its first quarter results.

Profits and sales soared for the social networking giant, which also took steps to allow founder and CEO Mark Zuckerberg to give away most of his fortune.

Stunning Financials

Zuckerberg decided in 2010 to join the likes of Microsoft’s Bill Gates and donate 99 percent of his fortune to others. He joined the Giving Pledge, set up by Gates and American philanthropist Warren Buffett.

And to this end Facebook announced it will create create a new class of non-voting shares (Class C capital stock). This will allow Zuckerberg to offload the bulk of his fortune (currently tied up in Facebook shares), but also would allow him to retain control of the company.

And the latest results from Facebook have shown that it continues to be a wealth generating machine, after it recorded another stunning set of financials that exceeded Wall Street expectations.

For the quarter ending 31 March, Facebook posted a tripling of its net profit to $1.51bn (£1.03bn), from $512m (£351m) in the same year ago quarter.

Sales likewise rose impressively to $5.4bn (£3.7bn) from $3.543bn (£2.4bn) a year earlier. Advertising alone generated $5.2bn (£3.6bn) in the quarter.

Analysts had expected revenue of $5.26bn.

“We had a great start to the year,” said Zuckerberg.” We’re focused on our 10 year roadmap to give everyone in the world the power to share anything they want with anyone.”

Shares in the company rose 9.5 percent in after-hours trading on Wednesday to $118.39 (£81.26). To put that into context how impressive its share price now is, when Facebook launched its IPO in 2012, its shares were only selling between $28 and $35 per share, a price that some felt at the time was overvalued.

Advertising Driver

It is clear that Facebook is milking the cash cow of advertising for all its worth, helped by the fact that advertisers are nowadays spending their budgets on web and mobile platforms instead of more traditional media such as newspapers and television.

And lets not forget that Facebook does still have the capability to expand its advertising reach into some of its products not currently hosting any advertising, namely WhatsApp and Messenger.

And the company continues to explore ways to broaden its online reach.

In December for example Facebook launched a new streaming video service that allows users to share content with their friends in real-time.

It also recently revealed it is looking to develop its own camera service in order to get its users to take and share more photo and video content.

It certainly seems as though Facebook remains a popular tool that is widely used.

Facebook’s own figures reveal that daily active users (DAUs) were 1.09 billion on average for March, an increase of 16 percent year-over-year. Mobile DAUs meanwhile were 989 million on average for March, an increase of 24 percent year-over-year.

Monthly active users (MAUs) were 1.65 billion, an increase of 15 percent, and mobile MAUs were 1.51 billion, an increase of 21 percent year-over-year.

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Tom Jowitt

Tom Jowitt is a leading British tech freelancer and long standing contributor to Silicon UK. He is also a bit of a Lord of the Rings nut...

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