Facebook Inc. (Nasdaq: FB) reported robust Q2 2015 earnings Wednesday after the close.
Facebook earnings were $0.50 per share. That even topped consensus earnings per share (EPS) whisper numbers of $0.49 and revenue of $4.03 billion.
Leading up to the results, anticipation was running high for FB to finally cross the $100 per share milestone. The social networking trailblazer has been flirting with triple digits since reaching an all-time high of $99.24 on July 21. Year to date, shares have climbed 23.15%.
However, shares fell 3.08% after hours to $94.26 as expenses continued to grow. Still, it was an impressive quarter.
Facebook earnings expectations were high heading into the release. Facebook is among the six companies, including Amazon.com Inc. (Nasdaq: AMZN), Google Inc. (Nasdaq: GOOGL), Apple Inc. (Nasdaq: AAPL), Netflix Inc. (Nasdaq: NFLX), and Gilead Sciences Inc. (Nasdaq: GILD), that account for 53% of the Nasdaq's $664 billion market value gain this year through July 24.
Here's some key highlights from the Facebook earnings report.
Key Figures from Q2 Facebook Earnings
EPS: Consensus EPS estimates were for $0.47, up from $0.42 in the same quarter a year ago, according to S&P Capital IQ. Actual: $0.50.
Revenue: Revenue was projected to reach $3.99 billion, up from $2.69 billion year over year (YOY), according to RBC Capital Markets. Actual: $4.04 billion.
Ad Revenue: Cantor Fitzgerald expected ad revenue would grow 41% in Q2. That's nearly three times faster than the overall ad market. Yet the total would be down from Q1's growth rate of 46%. Actual: Advertising revenues came in at $3.83 billion, higher than the $3.78 billion Wall Street expected.
Mobile Ad Revenue: In Q1 2015, mobile accounted for 73% of FB's advertising revenue, up from 59% in the same quarter a year ago. That figure was expected to rise to 75% in Q2, according to Cantor Fitzgerald. Actual: Mobile advertising is now more than three-quarters of Facebook's ad revenue - 76%.
User Growth: Facebook reported a record 1.44 billion monthly active users (MAU) in April. That staggering total is greater the entire population of China, the world's most populous nation, which is 1.39 billion. FB's monthly mobile user tally in Q1 was 1.25 billion. Analysts had expected total average MAUs around 1.48 billion, with the mobile MAU number reaching 1.29 billion, according to StreetAccount. MAU Actual: 1.49 billion, up 13% YOY. Daily average users came in at 968 million - besting Wall Street's expectations of about 960 million.
Expenses: In April, FB noted costs and expenses would increase as much as 65% in 2015 as the Menlo Park, Calif.-based company invests heavily in data centers, hiring, and long-term initiatives like virtual reality and solar powered drones. Facebook's Q1 R&D outlays more than doubled to $1 billion, while marketing and sales expenses nearly doubled to $620 million. Q2 operating expenses are forecast to have also doubled. Key here is showing that dwindling margins are the result of spending on ad technology and wearable computing instead of more "speculative investments," Bernstein Research said. Actual: Facebook's total expenses jumped 82% on a GAAP basis to $2.8 billion. On a non-GAAP basis, they were up 57%. In both cases, expense growth outpaced revenue growth. So, net income fell 9% YOY, while revenue rose 39%. That shows Facebook continues to spend liberally. That's unlike the recent fiscal prudence from Google and even Amazon.
The Dollar's Impact: Facebook generates more than half its revenue outside the United States, where the rising dollar has caused weakness in a number of major currencies, including the euro and Japanese yen. A stronger greenback is expected to pressure FB's overall revenue in both Q2 and Q3. The hit in Q2 was estimated at 7%, up from 2% YOY, according Macquarie Research. Actual: Revenue growth rate of 39% would have been 50% if not for foreign exchange rates.
Cash on Hand: FB ended Q2 with $14.14 billion in cash, cash equivalents, and marketable securities.
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