Facebook has outstripped expectations again, reporting a much-higher quarterly profit, driven by surging sales of mobile video ads, as its advertising revenue grew at more than twice the rate of larger rival Google.
Mobile ad sales now provide most of Facebook’s revenue and hit $8 billion for the quarter, a jump of 53 percent and more than analysts expected.
Facebook’s profits climbed 71% to $3.9bn (£3bn) boosted by an increase in sales of mobile video adverts, figures show.
The social media giant exceeded market expectations, posting a 45% increase in revenue for the three months to June of this year to $9.3bn (£7.1bn), compared with $6.4bn (£4.9bn) for the same period in 2016. This beat analysts’ estimates of $9.2bn (£7bn).
Shares in the world’s largest social network, which now has more than two billion regular users, rose by around 4% in after-hours trading.
“We had a good second quarter and first half of the year. Our community is now two billion people and we’re focusing on bringing the world closer together,” said Facebook’s founder and chief executive, Mark Zuckerberg.
Mobile advertising revenue accounted for 87% of the firm’s total ad revenue – an increase from 84% in the same three months last year.
The tech giant has manged to double its audience over the last five years after reaching the one billion user landmark in October 2012.
Every day, more than 800 million people “like” something on Facebook and more than 750 million new friends connect.
Facebook, which also owns fellow communication service giants WhatsApp and Instagram, has recently faced a barrage of criticism for failing to moderate extreme content.
It responded by introducing artificial intelligence to remove terrorist content and 3,000 extra staff in an effort to stop violent and illegal uploads appearing on the platform.
Zuckerberg said video would be a significant driver of the firm’s business during the next few years, and Facebook is expected to start broadcasting its own shows and series by the end of the summer.
“We are making some early investments to create episodic content,” Facebook Chief Operating Officer Sheryl Sandberg told CNBC in an interview.
The company has also overhauled its Instagram service over the past year to beat back a challenge from smaller rival Snap.
More than 15 million businesses now have a presence on Instagram, in addition to the 70 million who have Pages on Facebook, Sandberg said.
“Our goal is to be a platform for content creators,” she said.
Facebook is building more data centers to handle the surge in video traffic on its websites and is also on a hiring spree.
The company now has 20,658 workers, up 43 percent from a year earlier.
“We remain very solidly in investment mode,” Sandberg told CNBC.
View the interview with CNBC here:
Analysis: “AI key to relevance”
Following the announcement of Facebook’s Q2 earnings, showing that mobile ad sales now provide most of Facebook’s revenue, Yuval Ben-Itzhak, CEO at Socialbakers said: “As Ad saturation is becoming a reality on the News Feed, content quality, time of publishing and relevance have become more important than ever.
“This is where marketers should put AI to work to establish best recommendations on consumers and take smart decisions for the best outcome. Add to this Instagram’s outstanding growth in the last year, and we can begin to see an exciting opportunity for marketers in search of new audiences and greater engagement.”