Zuckerberg’s baby beats Wall Street’s expectations with $1.8 billion ad revenue
Facebook posted a 60% revenue increase in the third quarter thanks to mobile advertising growth. The numbers beat Wall Street’s expectations for the second consecutive quarter.
The world’s largest social network said Wednesday that it earned $425 million, or 17 cents per share, in the July-September period. That’s up from a loss of $59 million, or 2 cents per share, in the same period a year ago.
Adjusted earnings were $621 million, or 25 cents per share, in the latest quarter. That’s 6 cents better than analysts expected. This figure excludes special items, mainly stock compensation expenses.
Revenue grew 60%t to $2.02 billion from $1.26 billion, helped by increasing mobile advertising revenue.
Analysts, on average, were expecting revenue of $1.91 billion, according to FactSet.
“The strong results we achieved this quarter show that we’re prepared for the next phase of our company, as we work to bring the next five billion people online and into the knowledge economy,” CEO Mark Zuckerberg said in a statement.
Facebook’s advertising revenue was $1.8 billion, up 66% from a year ago. Mobile ads accounted for 49% of the company’s total ad revenue during the quarter. In the second quarter, mobile ads amounted to 41% of the total. The increase shows Facebook’s strategy to become a “mobile-first” company is paying off.
At the same time, Facebook is growing its share of the mobile advertising market. Research firm eMarketer estimates that Facebook will grab 15.8% of the world’s mobile ad spending this year, up from 5.4% last year. Google, meanwhile, is expected to capture 53.2% this year, up slightly from a 52.4% share in 2012.
There were 1.19 billion Facebook users as of the end of September, up 18% from a year ago. Of these, an average of 728 million users logged in every day during the month of September, up 25% from a year ago.
Facebook had 874 million monthly mobile users at the end of the quarter, up 45% year-over-year. In a conference call with analysts, though, Facebook finance chief David Ebersman said that the company did see a decrease in daily use among younger teenagers. That’s been a concern for some analysts who fear young people are migrating to newer sites. Luckily for Facebook, this includes the photo-sharing service it owns, Instagram.
After soaring as much as 18% to $57.98 after the results came out, shares of Menlo Park, Calif.-based Facebook fell back to $49.80 in extended trading during the company’s conference call. The stock had closed Wednesday’s regular trading day down 39 cents at $49.01.
As expected, the quarter’s operating expenses increased as Facebook continued to invest in growing its staff and enhancing its technical infrastructure. Total costs were $1.28 billion in the latest quarter, up 45% from $885 million a year ago. The company ended the quarter with nearly 5,800 employees, up 34% from a year earlier.
Facebook went public in May 2012 at $38 per share. It took the stock more than a year to surpass that price as the company worked to prove that it could grow mobile advertising revenue at a time when an increasing number of its users were accessing it on cellphones and tablet computers. Facebook didn’t start showing advertisements on its mobile applications until last spring. In the first quarter of this year, the mobile category accounted for 30% of total ad revenue.
