SAN FRANCISCO — Drama may be exciting, but consistency makes for better performance in the stock market.
Facebook reported second-quarter revenue and profits on Wednesday that exceeded Wall Street’s expectations. More important, the company has maintained steady growth in both revenue and users — a feat that has eluded smaller social networking companies like Twitter and Yelp, which both warned of dim outlooks this week and had their stock prices plunge.
With Facebook, “there is no negative inflection in the growth rate,” said Mark Mahaney, an Internet analyst at RBC Capital Markets, noting that the company’s operating profit margin of 55 percent, smoothed out for currency fluctuations, now rivals that of Google at its peak. “They are showing remarkably consistent results at massive scale.”
During a conference call with investors to discuss the results, Mark Zuckerberg, Facebook’s chief executive and co-founder, said that the company would make money from newer businesses like Messenger and WhatsApp the way the company did from its news feed — carefully. “So we ask for some patience on this to do this correctly,” he said.
Facebook, whose stock is up about 31 percent over the past year, has largely earned that patience from investors because of its steady performance over the last two years, as it shifted from a web-focused company into a mobile one, and invested in new businesses while increasing the size of its old ones. Its stock fell about 3 percent on Wednesday after releasing its results, but analysts said that was primarily a pullback from a recent quick rise.
Twitter, by contrast, has reported two quarters of disappointing results and has been struggling for the last year to come up with a viable plan to attract new users even while old users visit the service less frequently than ever. Yelp, a social review site, is also trying to find a new business model as its traditional advertising slows, and mobile users turn to other sites like Google for information on local businesses.
Both companies warned investors on Tuesday evening that rough times were ahead. Twitter’s stock fell more than 14 percent on Wednesday, and Yelp plunged 25 percent. It was the second consecutive quarter that the two companies’ share prices dropped sharply after their earnings were announced.
LinkedIn, another well-known social media company that disappointed Wall Street three months ago, will report its quarterly results on Thursday.
Facebook’s namesake social network has kept drawing in new users and has persuaded them to come back frequently. The company said that 1.49 billion people logged on at least once a month during the quarter, up from 1.44 billion in the first quarter. About 65 percent of Facebook users checked in daily — about the same level as it has been over the past year.
For the quarter, revenue rose 39 percent to $4.04 billion, up from $2.91 billion a year ago. Wall Street analysts had expected the Silicon Valley company to post revenue of $3.99 billion, according to S&P Capital IQ.
Net income was $719 million, or 25 cents a share, compared with $791 million, or 30 cents a share, a year ago. Excluding compensation-related expenses, the company reported a profit of 50 cents a share. On that basis, analysts had expected Facebook to report a profit of 47 cents a share.
Costs rose 82 percent over the prior year, but that was something that Mr. Zuckerberg had warned six months ago was going to happen.
Facebook, which generates virtually all of its revenue from advertising, has systematically expanded the reach of its ads beyond the early banner units on its site. It now offers marketers the ability to target ads to mobile phone users inside other companies’ apps, based on the demographic profiles it has compiled on its users.
Last month, the company said that it would open the Instagram photo feed to all advertisers. That is expected to bring in about $600 million in revenue to Facebook this year, increasing to $1.48 billion in 2016 and $2.81 billion in 2017, according to new projections by eMarketer, a research firm.
In an interview last week, Debra Aho Williamson, eMarketer’s principal analyst on social media, said: “Brand advertisers have had extraordinary success on Instagram. Engagement has been high.”
“Instagram has created this beautiful, well-lit environment for imagery for people to follow their passions and interests,” she said.
Even while Facebook begins to crank up the money machine on Instagram, it is already thinking about its next sources of growth.
The company has invested heavily in video, and is beginning to offer more video advertising — a business that it expects to grow exponentially over the next few years.
Early next year, it will begin selling virtual reality headsets from Oculus, a company it acquired last year for $2 billion.
Although the company declined to discuss short-term revenue for this business, Mr. Zuckerberg said, “There’s always a richer way that people want to share and consume thoughts and ideas, and I think that immersive 3-D content is the obvious next thing after video.”
It is not just Wall Street that likes predictability. Advertisers like it, too, said Max Kalehoff, chief marketing officer at SocialCode, which helps big brands like Heineken and Macy’s target ads on social sites.
“The more you can reduce friction and create a reliable and predictable venue, the more dollars you will see flow,” he said.