Source: Company reports

2Q16 RESULTS

Facebook reported 2Q16 revenues of $6.4 billion, up 59.2% from $4.0 billion in the year-ago quarter and ahead of the consensus estimate of $6.0 billion. Advertising revenue was $6.2 billion, up 63% year over year. Revenue from payments and other fees was $197 million, down 8% from the year-ago quarter. The company reported healthy increases in daily and monthly users in June, particularly mobile users. There was an average 1.13 billion DAUs in June, up 17% year over year. Of these, 1.03 billion were mobile daily users, up 22% year over year. In addition, there were 1.71 billion monthly active users (MAUs) as of June 30, up 15% year over year. Of these, 1.57 billion were mobile users as of June 30, up 20% year over year. Mobile advertising revenue was approximately $5.2 billion, up 80% year over year, and comprised 84% of advertising revenue in the quarter. Mobile represented approximately 76% of advertising revenue in the year-ago quarter, or $2.9 billion. Non-GAAP EPS was $0.97, up 92.7% year over year and well ahead of the $0.81 consensus estimate. GAAP EPS was $0.71, up 184% from $0.25 in the year-ago quarter. On July 20, Facebook announced there were more than 1 billion monthly users of its Messenger platform, and earlier in the month had begun testing encrypted end-to-end conversations on Messenger. At its F8 developer conference in April, the company launched chatbots on its Messenger platform, which use artificial intelligence and natural-language processing to create text-based agents that offer automated customer support, provide e-commerce assistance, distribute content and create interactive experiences.

OUTLOOK

The company did not provide guidance, however management commented they were pleased with the firm’s progress in video as they move toward a world in which video is at the heart of all its services. Prior to the earnings release, consensus estimated revenues and EPS of $6.6 billion and $0.87 for 3Q16 and $26.1 billion and $3.57 for the year, respectively.