There is a lot of opportunity to show ads to potential consumers when you’re a social network used by over 1.1 billion people each day. Facebook reported its third quarter earnings today, and its revenue rose more than 50 percent over the same period last year, to $7.1 billion. Out of that massive influx of cash, Facebook posted a net income of $2.37 billion, a massive increase of more than 165 percent compared to its profit for the same period in 2015.
Over a billion people now use Facebook every day on mobile alone, and the service is closing in on 2 billion monthly active users. Almost all Facebook’s money now comes from mobile advertising, which made up 84 percent of its ad revenue for the quarter. Revenues from payments and fees, the only other category Facebook breaks out in its earnings report, actually fell when compared to the same period in 2015. Facebook’s business is thus arguably less diversified than ever, but given its stellar results, most investors couldn’t care less.
With growth in its core ad business booming, Facebook is continuing to expand its spending on research and development. It plowed $4.35 billion in R&D in the first nine months of 2016, a roughly 24 percent increase over the same period in 2015. Despite its increasing interest in wacky and expensive projects ranging from drones to virtual reality to millimeter wave towers, Facebook’s operating margins got fatter, increasing to 45 percent this quarter, a 13 percent increase from the same period last year.