Facebook profits beat estimates as ad revenue surges

Facebook Inc's quarterly profit and revenue blew past Wall Street estimates as the company's hugely popular mobile app and a push into video attracted new advertisers and encouraged existing ones to spend more.

Facebook shares rose 6.7 per cent in after hours trading yesterday. Mobile advertising revenue accounted for 84 percent of the company’s total advertising revenue, compared with 76 per cent a year earlier.

Total advertising revenue surged 63 per cent to $6.24 billion, beating the average analyst estimate of $5.80 billion, according to market research firm FactSet StreetAccount.

Facebook, who employ about 1,000 people in Ireland, is one of the biggest beneficiaries as advertisers move money away from TV to the Internet and mobile platforms.

The company has been beefing up its presence in the mobile video market, where Snapchat and YouTube pose strong competition. The company is also exhorting advertisers to experiment with

Facebook Live, its recently launched live video product.

Facebook said about 1.71 billion people used the site monthly as of June 30, up from 1.49 billion a year earlier. Excluding items, the company earned 97 cents per share.

Analysts on average had expected a profit of 82 cents per share, according to Thomson Reuters I/B/E/S.

The net income attributable to Facebook’s stockholders rose to $2.05 billion, or 71 cents per share, in the second quarter ended June 30, from $715 million, or 25 cents per share, a year earlier.

Total revenue rose 59.2 per cent to $6.44 billion, compared with the estimate of $6.02 billion.

Seven summonses

Meanwhile, Facebook officials failed to show up after getting seven summonses from the US Internal Revenue Service demanding internal corporate records on one of its offshore tax strategies, according to an IRS court filing.

US authorities are examining Facebook’s federal income tax liability for the period ending December 31st, 2010, and are looking at whether the company understated the value of global rights for many of its intangible assets outside the United States and Canada that it transferred to an Irish subsidiary.

While Facebook has supplied some documents to the tax authority, it hasn’t provided books, records, papers and other data demanded in seven summonses, the IRS said in an amended petition filed on Monday at the US district court for the northern district of California.

The company declined to immediately comment. The IRS began examining Facebook’s 2010 tax filing in January 2013. – (Bloomberg)