Wednesday after hours, Facebook (NASDAQ:FB) announced stellar earnings. The company beat on both the top line and bottom line, as well as delivering incredible user growth and engagement rates. Overall, revenue in the quarter was $2.91 billion, which is an increase of 61% y/y. Further, crucial mobile advertising revenue shifted to represent 62% of total revenue, up from 41% a year prior.
In my previous article, I explained that Facebook would benefit greatly from the World Cup and would beat earnings estimates. Daily active users increased 19% y/y, mobile daily active users increased a staggering 39% y/y, monthly active users increased 14% y/y, and mobile monthly active users increased 31% y/y. New initiatives such as the save button, that was just launched, will help sustain those elevated engagement rates.
Facebook is clearly an incredible company with a bright future. A number of novel initiatives will allow it to further galvanize growth. Monetization has not even come from Instagram or Whatsapp and once that becomes accretive, growth will further accelerate. Moreover, after the earnings release, COO Sheryl Sandberg announced that Facebook has an astounding 1.5 million advertisers on the platform. With such high engagement and the ability to directly target ads, Facebook is poised for future success. Facebook is a prudent long-term addition to a portfolio.
Disclosure: The author is long FB. The author wrote this article themselves, and it expresses their own opinions. The author is not receiving compensation for it (other than from Seeking Alpha). The author has no business relationship with any company whose stock is mentioned in this article.