Facebook Delivers Solid Quarter; 76% of Ad Revenue ($2.9 Billion) Comes From Mobile

Despite beating analyst forecasts of $4.04 billion vs $3.99 billion (a 39% y-o-y increase), Facebook's stock was down in after-hour trading yesterday amid Wall Street's worries about its cost base.

Highlights:

- Mobile advertising revenue represented approximately 76% of advertising revenue for the second quarter of 2015, up from approximately 62% of advertising revenue in the second quarter of 2014.
- Capital expenditures for the second quarter of 2015 were $549 million.
- Cash and cash equivalents and marketable securities were $14.13 billion at the end of the second quarter of 2015.
- Free cash flow for the second quarter of 2015 was $1.33 billion.
- DAUs (Daily Active Users) were 968 million on average for June 2015, an increase of 17% year-over-year.
- Mobile DAUs were 844 million on average for June 2015, an increase of 29% year-over-year.
- MAUs (Monthly Active Users) were 1.49 billion as of June 30, 2015, an increase of 13% year-over-year.
- Mobile MAUs were 1.31 billion as of June 30, 2015, an increase of 23% year-over-year.

Advertising Products

The big stand out figure from the earnings call is the fact that Facebook is now getting 76% of its total ad revenue from mobile. That's nearly $2.9 billion from mobile advertising this quarter.

If you were under any illusion that all boats are rising with the mobile ad spend surge you need to reassess that position.

Facebook is dominating mobile advertising. As one senior ad exec put it to ExchangeWire recently, "Brands are not buying mobile, they're buying Facebook"

Details were sketchy around video revenue, which has been a massive focus for Facebook of late - with lots of reports around their attempts to build a competitor to YouTube.

No details were available around ad revenue from its other flagship products; Messenger, WhatsApp and Instagram - but continued strong growth in use of these products suggests significant opportunity for monetisation.

A report this week suggested that Instagram, in particular, could deliver significant revenue in the coming 12-to-24 months.

Its burgeoning ad tech stack was also mentioned in the call, with the CFO suggesting that there is huge potential for the company revenue-wise in leveraging both tech and its first-party data for advertiser clients.

No mention of timelines around its DSP launch - but ExchangeWire has been told by Facebook insiders that a Q1 launch in 2016 is likely to happen.

The question now is: how do you beat Facebook in mobile?