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Facebook Exceeds Analysts’ Expectations for 2Q15 Earnings

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Aug. 26 2015, Published 4:05 p.m. ET

Strong 2Q15 results

Facebook (FB) announced its 2Q15 earnings on July 29, 2015. The company reported adjusted EPS (earnings per share) of $0.50 and revenue of $4.04 billion. This is a 39% increase in revenue for the quarter ended June 30, 2015.

Facebook beat analysts’ EPS estimate of $0.47 cents and revenue of $3.99 billion. The company’s monthly active users (or MAU) in 2Q15 were 1.31 billion compared to 1.07 billion in 2Q14. This is an increase of 13% year-over-year.

Although the company beat analysts’ estimates in terms of projected revenue and EPS, the rate of growth has been slowing down for four consecutive quarters in terms of year-over-year revenue, as you can see in the above chart.

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Price-to-earnings ratio of peer companies

The overall price-to-earnings (or PE) ratio of the Internet Software & Services subsector of the Technology Select Sector SPDR ETF (XLK) is 16.20. Facebook’s PE ratio is significantly higher at 97.22.

Other companies that are part of this subsector include Equinix (EQIX), Yahoo! (YHOO), and Microsoft (MSFT), with PE ratios of 12.02, 5.122, and 31.40, respectively.

Future outlook

Facebook’s total user base is currently 1.4 billion. That’s 20% of the world’s population. According to analysts, Facebook’s future growth will rely on marketing activities and increased user time. Facebook’s acquisitions, including WhatsApp Messenger, Instagram, and Messenger, will ensure that inorganic growth continues for the long term.

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