Facebook (FB, Financial) posted an enviable quarter of growth and exceeded expectations in its second-quarter earnings, released after market trading Wednesday.
The social media giant announced total revenue growth of 45% from the year-ago second quarter to $9.32 billion. The numbers included 47% growth in advertising and a 20% dip in payments and other fees. Analysts expected $9.2 billion in revenue.
Facebook also posted 71% growth in net income to $3.89 billion, with diluted earnings per share of $1.32, reflecting a 69% increase.
"We had a good second quarter and first half of the year," Facebook founder and CEO Mark Zuckerberg said. “Our community is now two billion people and we’re focusing on bringing the world closer together.”
The company’s shares climbed 3.6% in after-hours trading, reaching $171.68 per share.
Much of Facebook’s strength derives from its growth in daily active users, which has increased annually in the past two reported years.
The company relies heavily on user growth as its worldwide average revenue per user has struggled to edge back up to its fourth-quarter peak of $4.83. In the second quarter it reported $4.73 per user and in the first quarter $4.23. Facebook generates the lion’s share of its revenue from advertising. In the second quarter, 87% came from mobile advertising, increased from 84% year over year.
At quarter-end, Facebook had $35.45 billion in cash amassed on its balance sheet.
Zuckerberg laid out the company’s shift in mission from connecting friends and families to building a global communities in the conference call. He also reiterated from the first-quarter call its long- and short-term goals: making core services more useful and engaging now, building ecosystems around products people already use over the upcoming five years, and investing in technologies that would make sharing “more immersive” over the upcoming 10 years.
“We remain solidly in investment mode,” David Wehner, Facebook’s CFO, said.
Cheryl Sandberg, Facebook COO, said that her goal is to connect businesses and people through was increasing business’ use of mobile, developing innovative ad products like dynamic ads, and making ad more relevant and effective with more precise measuring devices.
Facebook also said a decline in its desktop ad revenue and advertising impression growth as it shifts its emphasis to video will result in lower revenue growth rates for the rest of the year. Its increased focus on Messenger ads would not offset the losses, though Zuckerberg said it needed to move faster on Messenger growth.
