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Facebook Reports $3.54B 1Q Revenue, But Disappoints Investors – Social Network Comes in Slightly Below Analysts Estimates Due to Sharply Increased Spending in First Quarter

Thursday, April 23, 2015 4:42

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(Before It's News)

Mobile advertising propelled Facebook to a revenue of $3.54 billion with earnings of 42 cents per share in the social network’s first quarter of 2015.

Despite the impressive numbers posted by the social media firm, it still failed to meet analysts’ revenue forecasts of $3.56 billion — the first time in 10 quarters that Facebook has not met or surpassed Wall Street’s estimates.

The miss was due, Facebook said, to an increase in spending as well as unfavorable foreign exchange rates.

Eexpenses in the first quarter were up 83 percent to $2.61 billion. Research and development spending, for instance, came in at $1.06 billion, compared to $455 million in the year-ago quarter.

Sheryl Sandberg, Facebook chief operating officer, USA; Young Global Leader is captured during the session ‘Handling Hyper-connectivity’ at the Annual Meeting 2011 of the World Economic Forum in Davos, Switzerland, Jan. 28, 2011.
Copyright by World Economic Forum swiss-image.ch/Photo by Jolanda Flubacher

Ad revenue hit $3.3 billion, up 46 percent or 55 percent on a constant currency basis, while mobile ad revenue was up 82 percent to total 73 percent of Facebook’s ad revenue.

“Mobile continues to be a great opportunity for us. People continue to be highly engaged with our mobile apps,” chief operating officer Sheryl Sandberg told investors in a conference call.

“In the United States, for example, Facebook and Instagram get more than one out of every five minutes spent on mobile. As consumers shift to mobile, businesses are following, and we’re focusing on helping them take advantage of this opportunity to use mobile to build their businesses.”

She said video is sure to play a major role in bringing more marketers to mobile.

“More than 75 percent of global video views on Facebook occur on mobile, and we believe mobile video will become more important to marketers over time,” she said.

CEO Mark Zuckerberg, in the earnings call, said despite missing Wall Street’s forecast, the firm’s results prove Facebook is focusing on the years ahead.

“Facebook has evolved from a single blue app on your phone into a family of apps,” he said. “Now, many of these apps are reaching a global scale. More than 1.4 billion people use the core Facebook service, 800 million also use WhatsApp, 700 million use our Groups product, 600 million use Messenger, and on Instagram, there are more than 300 million active members of the community.

“We’re building this family of apps because we want people to be able to share whatever moments they want with all the different sets of people they care about.Over time, we expect people to share richer content with an increasing frequency so we want to continue developing new and better tools to facilitate this expression.”

Zuckerberg also pointed out Facebook had reached some important milestones in the quarter, such as more than four billion daily videos views and having two million advertisers on Facebook.

There were 1.44 billion monthly active users as of March 31, up 13 percent year-over-year. On mobile there were 1.25 billion monthly active users, an increase of 24 percent.

Facebook also reported making more money per user with an average revenue of $8.32 per person in the U.S. and Canada, up from $5.35 in 2014.

Despite the generally optimistic report, investors could not get over Facebook’s increase in spending and shares dipped two percent in after hours trading Wednesday.