Facebook profit falls 9 percent as costs soar
By Devika Krishna Kumar and Yasmeen Abutaleb
(Reuters) - Facebook Inc reported quarterly revenue that beat forecasts but its profit fell 9 percent as the social media company sharply increased spending to boost mobile revenue and future growth.
Expenses will grow 55 to 60 percent in 2015 from last year, including an 82 percent jump in the second quarter to $2.77 billion, it added.
"We're investing in the next set of services and what will be future investments like Messenger, WhatsApp and Oculus," Chief Operating Officer Sheryl Sandberg said in an interview on Wednesday after the earnings report. She was referring to Facebook's two messaging services and virtual reality headset maker Oculus Rift, whose first product for consumers has yet to be launched.
Messenger has more than 700 million users, and the app has been downloaded more than 1 billion times on Android, Google Inc's mobile operating system, Facebook said.
Over the coming months, Facebook will add new advertising formats to photo-sharing app Instagram, which was launched in Brazil, Germany and Japan in the second quarter, Sandberg added on a conference call.
Macquarie Research analyst Ben Schachter said the costs and spending met expectations. "We think the company has a lot of opportunities ahead of it so we want to see them investing quite heavily in those investments," he said.
Facebook shares fell more than 3 percent in after-hours trading. As of Wednesday's close of $96.99, the stock has risen 24.3 percent this year, valuing the company at $276.4 billion.
Facebook, the world's largest social network, continued to expand its reach, hitting 1.49 billion monthly active users as of June 30, up 13 percent from a year earlier. Of these, 1.31 billion accessed the service through mobile devices, a rise of 23 percent. Continued...