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You’re more valuable to Facebook than ever before

Facebook smoked Wall Street’s earnings estimates Wednesday, and its stock is up.

Mark Zuckerberg Attends Mobile World Congress 2016 David Ramos / Getty

Facebook stock is up after the company beat all Wall Street’s earnings expectations for the second quarter on Wednesday. One of the big reasons why is that it’s generating more dollars for every user, which is interesting given that the second quarter is generally not a heavy advertising season. That usually comes toward the end of the year.

The company reported profit of 97 cents per share on $6.44 billion in revenue, the vast majority of which came from mobile ads. Those numbers blew Wall Street estimates out of the water. Analysts were looking for profit of 82 cents per share on roughly $6 billion in revenue for the quarter.

Facebook is making more money on each person, $3.82 per user, which is more than the $3.60 the Street estimated. What’s also impressive is it’s higher than what Facebook generated in Q4 during the holiday shopping season, when advertising goes full throttle.

Here’s the chart:

Facebook ARPU for Q2 2016

Why does this matter? Because Facebook has more than 1.7 billion active users, and its user growth will eventually slow. If user volume isn’t going to increase substantially, then user value needs to increase in order for Facebook to keep its money machine headed in the right direction.

Facebook CFO Dave Wehner attributes the company’s ARPU growth to simple advertiser demand. More and more advertisers are now spending on mobile, he told Recode, and when they do, Facebook is well positioned to catch their ad dollars.*

Facebook’s user base is now at 1.71 billion monthly active users, up from 1.65 billion in Q1. That means the company added more than 60 million new users last quarter alone. So growth isn’t slowing just yet.

The stock is up more than 6 percent in after-hours trading immediately following the news.

Facebook will hold a call with investors and analysts at 2 pm PT today, and we’ll be listening in.

* This story was updated to include information from our interview with Wehner.

This article originally appeared on

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