The $5 billion fine Facebook agreed to pay to the Federal Trade Communications in a settlement over privacy issues had no bearing on the company’s second-quarter financial results, which were reported earlier this week.
Facebook reported revenue of $16.886 billion, up 28% from $13.231 billion in the second quarter of 2018. Nearly all of that revenue—$16.624 billion—came from advertising.
Chief financial officer David Wehner said in his opening remarks during Facebook’s earnings call that in terms of regional ad revenue growth, North America and the Asia-Pacific region led at 30% apiece, followed by Europe at 21% and rest of world at 21%, adding that the latter was impacted by currency headwinds.
The company’s net income fell 49% year-over-year, to $2.616 billion from $5.106 billion. Facebook cited a $2 billion accrual in connection with its FTC settlement, as well as a cumulative income tax expense of $1.1 billion due to the Ninth Circuit Court of Appeals’ reversal of a U.S. Tax Court decision regarding the treatment of share-based compensation expense in a cost-sharing arrangement.
Facebook said over 2.1 billion people now use its family of applications—Facebook, Instagram, WhatsApp and Messenger—on a daily basis, and more than 2.7 billion do so on a monthly basis.
Facebook reported an average of 1.59 billion daily active users at the end of the second quarter, up 8% compared with the year-ago period. Wehner said gains in India, Indonesia and the Philippines helped drive growth.
The social network had 2.41 billion monthly active users at the end of the quarter, up 8% year-over-year.
Mobile advertising revenue accounted for 94% of total advertising revenue for the quarter, up from 91% last year.
Facebook had a total headcount of 39,651 as of June 30, up 31% from the same date in 2018.
The shift in advertising on the social network from News Feed to Stories was discussed frequently during the company’s earnings call.
Chief operating officer Sheryl Sandberg said during her opening remarks, “Consumers often adopt new technologies first, and our competitive advantage is helping advertisers reach people where they are. We helped businesses make the shift to mobile, and now we are helping them shift to Stories, video and eventually messaging. We know that it’s not enough to make these new formats available. We also need to make it easy for advertisers to create effective ads. We do this by launching new ad products and by improving our existing ones to deliver more value for people and advertisers.”
She did not discount News Feed ads, saying, “We’re constantly making incremental improvements to Facebook feed ads. This quarter, we improved how quickly we refresh the ads people see. In the past, these ads were pre-selected at the beginning of a feed session. Now, the ads are refreshed while people are scrolling through their feed. This means people get more relevant ads, which improves engagement and delivers a better return on investment for advertisers.”
She expanded on Stories ads during the question-and-answer portion of the call, saying, “One of the most important things we learned as we were doing this transition to mobile is that if we made it easier for our advertisers to place the ad, to make sure they understood the measurement they were having, and also to make sure the ads format worked, businesses would move more quickly. Usually, people move before businesses, so people moved to mobile before businesses, and we certainly saw the same with Stories. But I think one of the successes you’re seeing that we’re having right now is that we are helping people move to Stories more quickly because of the lessons we learned.”