Business

Facebook reports 138% surge in profits

  • 23 July 2014
  • From the section Business

Facebook has announced a 138% rise in net income for the second quarter to $791m (£464m).

Revenue from advertising, which makes up most of Facebook's income, was $2.68bn, up 67% compared with the second quarter of 2013.

Adverts on mobile devices now account for 62% of advertising revenue, which is a spectacular rise as mobile ads accounted for almost nothing in 2012.

But Facebook's rapid expansion has resulted in a sharp rise in costs.

'Opportunity ahead'

Expenses were $1.52bn in the second quarter up 22% from 2013.

"We had a good second quarter," said Facebook founder and chief executive Mark Zuckerberg in a statement accompanying the results.

"Our community has continued to grow, and we see a lot of opportunity ahead as we connect the rest of the world," he said.

The company now has 1.32 billion active users every month, up 14% on last year.

Of those users more than a billion are on mobile devices.

Oculus Rift
Facebook recently bought the maker of virtual reality headsets Oculus VR

To try and maintain its lead in the technology industry Facebook has made big purchases this year.

In March it announced the purchase of Oculus VR a maker of virtual reality headsets and in February it bought social media firm WhatsApp.

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Analysis

Leo Kelion, BBC Technology Desk Editor

Facebook looks to have pulled off a tricky balancing act.

Its members have shifted to using the social network on smartphones. That means they are seeing fewer adverts, but the firm has compensated by charging more for them.

That has been helped by the launch of auto-playing "premium" video slots.

A move announced in May to start placing ads in other companies' apps should also help the firm continue with its desktop-to-mobile transition.

Facebook's ability to draw on its rich knowledge about its users' interests and habits means it has a strong case to claim it's best suited to match specific brands to specific users.

The firm acknowledged, however, that it would take years to build up a solid businesses around its Whatsapp messaging app and Instagram photo network - both expensive acquisitions.

Mark Zuckerberg, Founder Facebook
Facebook's founder Mark Zuckerberg is betting on virtual reality

Instagram recently announced plans to roll out ads in the UK, Canada and Australia having already done so in the US.

But Whatsapp has promised users that ads will never interrupt their chats.

One deal that has just finished is Facebook's $2bn takeover of Oculus VR

Mark Zuckerberg told analysts on the conference call that a future shift to virtual reality (VR) could be as big as the one we've already seen to mobile.

But it represents a giant bet. The division has yet to release its first Oculus Rift helmet to consumers and there's no guarantee it will succeed where other VR firms have failed.

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