Facebook Q3: $7 Billion Revenue But Growth Warning For 2017

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Facebook is among the most popular websites on the planet today and its mobile app is also one of the most downloaded apps from the Google Play Store. It’s no wonder, then, that the social networking giant has snagged about $7 billion in quarterly revenue for the third quarter of 2016, 84-percent of which comes from its mobile ad business compared to 78-percent during the same period last year. As it stands, Facebook is now on track to generate approximately $27 billion in revenue this year. The Q3 2016 revenue is up 56-percent from a year-ago and was higher than the $6.92 billion that has been expected, thanks largely to Facebook’s hegemony in mobile advertising.

The social media titan began to invest heavily in its mobile business in 2012 and has since attracted a huge number of businesses interested in reaching more consumers through mobile platforms. Since then, users spent more time literally scrolling down and up the Facebook mobile app. In fact, during the past year Facebook added about 270 million users who log in to its core mobile app once a month, on average. It now has 1.79 billion monthly active users, 93-percent of which use Facebook via a mobile device. Facebook has since started making money by injecting ads into the mobile news feed.

While the social media titan posted better than expected revenue for the last quarter, it’s likely to face a drop in advertising revenue next year as it plans to minimize the amount of ads shown to users in the news feed. Facebook Chief Financial Officer Dave Wehner raised the warning to analysts during an earnings call, where he said Facebook would be seeing smaller contribution from mobile ads going forward. The company is adopting a new strategy to boost profits. Wehner explained that Facebook hopes to sustain growth by growing its user base and increasing the amount of time users spend on the social networking site. More specifically, Facebook will be turning to video as a critical factor of its future growth. For Facebook, more videos would mean longer screen time for users, which in turn could help the company generate more profit from video ads.