Facebook revenue up 59%, to hike expenses 55 to 75% next year
29 Oct 2014
Facebook Inc yesterday posted better-than-expected 59 per cent jump in third-quarter revenue coupled with a solid gain in its user base that was already the largest social media community in the world.
However, the social networking site cautioned of a dramatic increase in spending in 2015 and projected a slowdown in revenue growth this quarter, leaving its market value eroded 10 per cent, Reuters reported.
Chief financial officer (CFO) Dave Wehner told analysts on a conference call that the social network was preparing for a 55-per cent to 75-per cent spike in expenses next year, when the world's largest social network intended to invest in Whatsapp, Oculus and other products that had yet to show a profit.
According to Wehner's projections, revenue growth is expected at 40 per cent to 47 per cent in the final quarter of 2014, down sharply from 59 per cent in the third quarter.
He said the company was investing where it thought there was a great opportunity for long-term growth. The social network was therefore investing in the people as also in existing and newly-acquired products.
Facebook shares, up roughly 47 per cent this year retreated over 10 per cent to $72.65 in extended trading yesterday.
Meanwhile, the world's biggest social network, had recorded another increase in third quarter earnings as it continued its acquisition spree, abc.net.au reported.
The period saw the company make $806 million, thanks to increased advertising revenue.
The figure is up to almost double the $425 million it made in the same period a year ago.
Revenue jumped to $3.2 billion as against the same time a year ago and was expected to rise by 47 per cent in the December quarter year-on-year.
Facebook's revenue is mostly advertising driven, with around two-thirds of that coming from ads made specifically for mobile phones, which was up from half a year ago.
According to Facebook, the average price it received per ad increased 274 per cent as against the third quarter a year ago.
Increasing number of eye balls are driving up unit prices of ads. In the three months to September, the company recorded 1.35 billion monthly users up from 1.32 billion in the June quarter and 64 per cent of those people used the service on a daily basis.
