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Facebook posts strong Q2 profits, mobile ad revenues surge

Facebook's share value surged on positive news from its second-quarter earnings, reaching nearly double its IPO value.

By Ananth Baliga
Facebook posts strong Q2 profits, mobile ad revenues surge
Facebook has swiftly made the transition to mobile, with mobile advertising now accounting for 62 percent of its ad revenues and over a billion people using their mobile app. UPI/Terry Schmitt | License Photo

MENLO PARK, Calif., July 24 (UPI) -- Facebook reported late Wednesday profits that more than doubled and revenues that met expectations, as the social network strengthened its mobile presence.

The Menlo Park-based social network company posted revenues of $2.91 billion, up 61 percent, and a profit of $791 million, up from $333 million a year ago. Advertising on mobile devices accounted for 62 percent total sales revenue, up from almost nothing at the time of its IPO.

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"This is a good quarter for us," said Facebook Chief Executive Mark Zuckerberg on a conference call with analysts Wednesday, but "there's still so much room to grow," he said.

The company, contrary to expectations, increased its user base by 40 million people with around a fifth of the world's population, or 1.32 billion people, logging onto the social network every month, most of them using the mobile app. Many believe the social network is losing its appeal with younger users and expected growth to slow.

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Mobile devices accounted for more than two-thirds of the company's revenues, largely from ads shown in a user's News Feed. According to eMarketer, Facebook now accounts for 18 percent of the roughly $17.7 billion U.S. mobile ad market, still behind Google, whose share has fallen to 39.8 percent from 49.8 percent during this period.

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In order to further boost its ad sales, Facebook will push its premium video advertising and mobile advertising, which it sells through a network that sells ads on mobile apps it doesn't own.

"Our tools and the products we're building are working," Chief Operating Officer Sheryl Sandberg said, adding that the company now has 1.5 million advertisers. "They're working to drive engagement, they're working to drive sales."

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In the past year, Facebook has shifted its app strategy to develop more independent apps away from its primary Facebook app. The company released Slingshot, Paper and Poke but all received a lukewarm response from users, with Facebook having to take down Poke, its challenge to Snapchat.

Zuckerberg said they company would continue to make investments in ad technology, new independent apps, virtual reality, Facebook search and private messaging.

"We think it is going to be years of work before those are huge businesses for us," he said. "I really can't underscore this enough that we have a lot of work to do. We could take the cheap and easy approach and put ads in and do payments and make money in the short-term, but we're not going to do that."

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