Facebook profit falls 9 percent as costs soar, shares slip
NEW YORK – Facebook Inc (FB.O) reported a 9 percent fall in quarterly profit as it spent heavily to boost mobile revenue and develop products such as messaging service WhatsApp, photo-sharing app Instagram and virtual reality headset maker Oculus Rift.
Shares of the social network fell 4.2 percent to $92.90 in after-hours trading on Wednesday.
Facebook’s total costs and expenses jumped 82 percent to $2.77 billion (1.77 billion pounds) in the three months ended June 30.
The company had warned that 2015 would be a year of heavy investment, but analysts have said these investments are likely to translate into significant revenue streams in coming years.
Mobile ads accounted for 76 percent of Facebook’s advertising revenue of $3.83 billion in the second quarter, compared with 62 percent in the same quarter last year.
Video ads, which Facebook began offering last year, is the fastest growing category of Internet advertising.
The business is currently dominated by Google Inc (GOOGL.O), owner of YouTube, but analysts say Facebook is catching up fast.
Facebook said it had 1.49 billion monthly active users as of June 30, up 13 percent from a year earlier.
Of these, 1.31 billion accessed the service through mobile devices, a rise of 23 percent.
Net income attributable to stockholders fell to $715 million, or 25 cents per share, from $788 million, or 30 cents per share, a year earlier.
Excluding items, the company earned 50 cents per share.Revenue jumped to $4.04 billion from $2.91 billion.
Analysts on average had expected earnings of 47 cents per share on revenue of $3.99 billion, according to Thomson Reuters I/B/E/S.
Up to Wednesday’s close of $96.99, Facebook shares had risen 24.3 percent this year, valuing the company at $276.4 billion. -Reuters