Facebook Signals More Urgency About Building Its Chat Businesses

Facebook’s investors are salivating over the revenue potential for the company’s chat businesses, after Mark Zuckerberg said he’d like to move “a little faster“ to make money from them, according to Bloomberg.

The company has warned that sales growth, fueled primarily by mobile advertising, will slow because it can’t keep loading ads into users’ news feeds on its main social network. Both of Facebook’s chat apps have more than 1 billion users, though neither contributes significant revenue yet. After the company’s earnings report Wednesday, Wall Street decided these apps are the answer to the growth challenge, and Zuckerberg’s comments sent the shares up as much as 4.7 percent in extended trading.

Executives spent the bulk of their earnings call with investors fielding questions about the potential for Messenger and WhatsApp. Zuckerberg tempted them further, saying Facebook “should be able to do better“ at building a business than popular Asian messaging apps. It was left to Chief Operating Officer Sheryl Sandberg and Chief Financial Officer David Wehner to quickly remind everyone that the app businesses were still in experimental phases.

Sensing he might have inflated expectations just a bit too much, Zuckerberg reframed his remarks. “So there have been a number of questions about Messenger,“ he said. “It’s a longer term thing. I actually think in over the next couple of years or few years, the much bigger driver of the business and determinant of how we do is going to be video, not Messenger.“

Facebook reported second-quarter sales that beat analysts’ estimates, climbing 45 percent to $9.3 billion. Mobile advertising generated 87 percent of total ad revenue, an increase from 84 percent in the same period a year earlier. Net income rose to $3.9 billion, or $1.32 a share, from $2.3 billion, or 78 cents.

Facebook’s social network, now with 2.01 billion monthly active users, is steadily driving sales at a faster pace than at other technology giants. That consistency funds the company’s efforts in chat applications and virtual reality. To keep up growth, Facebook has been heavily investing in video.