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Facebook's profits slip amid spending spree - Daily News Egypt

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Facebook’s profits slip amid spending spree


The world’s biggest social network saw its second-quarter profits fall as it shelled out billions of dollars to develop its “family” of applications. The heavy investments are aimed at boosting future growth.
Facebook, already the world’s largest social network, has a voracious appetite for growth, but satiating it can be costly.

In the second quarter of 2015, the company spent heavily to attract more mobile users by improving its messaging and photo-sharing apps, which include Messenger, WhatsApp and Instagram.

It also poured more money into the virtual reality headset maker Oculus Rift, which has not yet released a product for consumers.

As a result, Facebook on Thursday reported a Q2 profit of $715 million (652.7 million euros), a 9 percent fall over the same period last year. Shares were also down more than 3 percent in after-hours trading after closing at $96.99.

But Facebook’s spending spree hasn’t stopped its stock from rising 24.3 percent this year. On Thursday, the company also noted that total revenues had surged 39 percent to $4.04 billion on big gains from advertising, chiefly from paid messages delivered to mobile devices.

Facebook’s total costs and expenses jumped 82 percent to 2.77 billion dollars in the three months ending June 30, driven in large part by stock compensation linked to its multi-billion-dollar acquisition of WhatsApp. The company’s research and development costs were 1.17 billion dollars.

Heavy investment

Facebook had warned that 2015 would be a year of heavy investment. Analysts have said the newly acquired services such as Oculus and Instagram are not delivering meaningful revenues now, but could build a base for future growth.

Mobile ads accounted for 76 percent of Facebook’s advertising revenue of $3.83 billion in the second quarter, compared with 62 percent in the same quarter last year.

Video ads, which Facebook began offering last year, is the fastest growing category of Internet advertising.

1.5 billion users

Facebook itself has been a rising star in online advertising. It accounted for 7.9 percent of worldwide digital ad revenues in 2014, according to the research firm eMarketer, which predicts that share will reach 9 percent by the end of this year.

Facebook said it had 1.49 billion monthly active users as of June 30, up 13 percent from a year earlier. Of these, 1.31 billion accessed the service through mobile devices, a rise of 23 percent.

“This was a good quarter for us,” said Facebook founder and chief executive Mark Zuckerberg on a conference call on the results. “We have continued to make good progress in the growth of our community.”

bea/cjc (Reuters, AFP)


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