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Facebook has good results on ad uptick, but game payments look weak
Facebook has good results on ad uptick, but game payments look weak
July 23, 2014 | By Christian Nutt

Today, Facebook announced its second quarter 2014 results. The company's revenues grew to $2.91 billion for the quarter ended June, a 61 percent increase year-on-year.

Payments and other fees grew a much smaller 9 percent year-on-year, to $234 million. This is where the bulk of the platform's direct revenue from games shows up. However, those numbers are actually down for the second straight quarter (see the graph below.)

If the pattern from last quarter holds, the company will have seen little growth in game revenues; they inched up just 1 percent in the prior quarter, despite overall year-on-year increases. In Facebook's investor call following this announcement, CFO David Ebersman repeated what he said last time: game revenues grew just 1 percent, and declines in desktop use of Facebook mean they're unlikely to grow much in the future.

The company this month bolstered its efforts to boost in-game payments via its popular advertising services, however, by letting developers advertise in-game purchases directly from ads.

The big win was in advertising revenues: The company saw an increase of ad revenues of 67 percent, paired with a daily active user boost of 19 percent year-on-year, at 829 million on average. Year-on-year, Facebook grew its mobile DAU 39 percent, in its ongoing bid to transition to a mobile-focused service.

On a non-GAAP basis, the company posted profits of $1.09 billion (up year-on-year from $488 million) for the quarter on its $2.91 billion revenues (up year-on-year from $1.8 billion), which is a better than analysts predicted: $2.81 billion in revenue.

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