Being the most popular start-up that Facebook purchased, Instagram has a special ability of setting the tone for how other major acquisitions of Facebook choose to monetize.
A clear sign that the number one social media platform is still doing alright financially-wise is that the first analyst question debuting the company’s earnings call basically asked the CFO why isn’t he investing more money.
Just to be clear, Dave Wehner – Facebook’s CFO – said he was spending as fast as he could, as he will continue to do so throughout 2015, a year that sees Facebook focusing on investment.
His predictions for the rest of the year are in line with the second quarter of the company, which stayed on the safe side – not a great quarter by Facebook standards, but definitely not a bad quarter either.
According to company reports, revenue reached $4.2 billion last quarter, presenting an increase of 39 percent over the same quarter last year. Its profit was nicely rounded, too, boasting at $719 million; all in all, a good quarter.
In spite of the surprising habits that CEO Mark Zuckerberg might have when it comes to dropping mind-blowing amounts of cash on various start-ups, his company has favor in the eyes – and pockets – of investors. Zuckerberg has also started putting money into Internet.org, a humanitarian project that aims on bringing internet to more people.
But even with the sheer amounts of cash that keep coming out of Facebook, its stock has remained unbeatable, due to steady growth in number of users, good profit margins and increasing revenue.
Former complaints of investors, saying that Facebook took too long to launch on mobile and that is gradually losing appeal with teenagers, are now erased forever. Up to 76 percent of the company’s revenue currently comes from mobile, and Instagram – boasting over 300 million users – has long passed the danger of becoming obsolete.
But analysts have a new concern to obsess over: can Instagram profit from being cool? Even though ads have been running on the platform for a year now, Facebook has yet to deliver any reports on the revenue Instagram brings in-house.
During the earnings call meeting, analysts wanted to know about Instagram’s opening to advertisers and how ads on the platform can target various consumers. They also inquired about how willing are Instagram users to interact with ads.
Facebook didn’t give much of an answer. According to Sandberg, Instagram is still very small relative to Facebook, and only time will tell if it can have significant impact on the company’s growth.
Image Source: Mashable
Joe Hennessey
