Facebook Inc. (NASDAQ/FB) shares tumbled four percent on Thursday morning. Why? The company just released its second-quarter earnings. (Source: Facebook Inc., July 29, 2015.)
In the second quarter of 2015, Facebook’s revenue increased 38.9% year-over-year to $4.04 billion. Excluding exchange rate fluctuations, revenue would be up 50%.
Bottom line improved as well. Adjusted net income increased from $1.1 billion to $1.4 billion. This translated into adjusted earnings per share (EPS) of $0.50, a 16.3% improvement from the $0.43 in the same quarter last year.
Facebook Posted Strong Growth, Investors Weren’t Impressed
The company beat analyst expectations of $3.99 billion in revenue and EPS of $0.47. However, investors weren’t so impressed. On Thursday morning, shares of Facebook were trading 4.2% lower at $92.95 apiece.
“This was another strong quarter for our community,” said the company’s founder and CEO Mark Zuckerberg. “Engagement across our family of apps keeps growing, and we remain focused on improving the quality of our services.”
Facebook managed to grow its monthly active users (MAUs) by 13% year-over-year to 1.49 billion in the reporting quarter. More people are using Facebook on their mobile devices too; mobile MAUs surged 23% year-over-year to 1.31 billion.
Advertising revenue increased 43% year-over-year to $3.8 billion. Region-wise, North America and Asia-Pacific reported the strongest ad revenue growth, at 55% and 48%, respectively. Europe’s ad revenue grew 30%, while the rest of the world increased 22%. Note that this solid growth came in despite strong currency headwinds.
As users shift from desktops to mobile devices, Facebook was able to capitalize on the movement. The company’s mobile ad revenue surged 74% year-over-year, and made up more than three quarters of total ad revenue.
Facebook has also become a great platform for small and medium businesses to market their products and services. In the second quarter of 2015, Facebook announced that there were forty million small and medium businesses that had active Facebook pages, and the number was still growing.
One segment that showed a decline was revenue from payments and other fees. In the reporting quarter, payments and other fees revenue dropped eight percent year-over-year to $215 million. The drop was mainly driven by a 19% decline in payment revenue from games played on personal computers.
Despite today’s tumble, Facebook’s stock performance is still solid year-to-date. Since the beginning of this year, Facebook’s share price has climbed more than 20%.