Mobile ad revenue lifts Facebook past Wall Street targets

SAN FRANCISCO Thu Jan 30, 2014 7:11am IST

A portrait of the Facebook logo in Ventura, California December 21, 2013. REUTERS/Eric Thayer/Files

A portrait of the Facebook logo in Ventura, California December 21, 2013.

Credit: Reuters/Eric Thayer/Files

Related Topics

Stocks

   

SAN FRANCISCO (Reuters) - Facebook Inc (FB.O) delivered its strongest revenue growth in two years, beating Wall Street targets as the Internet company's mobile ad sales continued to accelerate.

Shares of Facebook surged 12 percent to $59.98 in after-hours trading on Wednesday.

The world's largest social networking company said that revenue from mobile ads represented 53 percent of its total advertising revenue in the last three months of the year, or $1.24 billion, versus the 49 percent proportion that mobile ads represented in the third quarter.

"They've cracked the code on mobile," said Arvind Bhatia, an analyst at Sterne, Agee & Leach. "Within a little over a year's time mobile has taken over desktop," in terms of ad revenue he said.

Facebook said it now has 1.23 billion monthly users, with 945 million accessing the service on a smartphone or tablet.

Facebook's newsfeed ads, which inject paid marketing messages straight into a user's stream of news and content, have boosted Facebook's revenue and its stock price in recent months. The ads are ideally suited for the smaller-sized screens of smartphones and other mobile devices.

The average price per ad on Facebook has surged 92 percent in the past year, the company said, even as the total number of ad impressions on Facebook declined 8 percent.

In a conference call with analysts on Wednesday, Facebook Chief Executive Officer Mark Zuckerberg said the focus going forward was to improve the quality and the relevance of the newsfeed ads, rather than boosting the amount of ads in users' newsfeed.

Among the other priorities for the coming year, Zuckerberg said the company would focus on creating new standalone products and on improving Facebook's nascent search product.

Reuters Insider - Mobile mojo lifts Facebook earnings reut.rs/1ibnAlW

DAILY USE RISING

Facebook had spooked some investors in October when it said that it noticed a decrease in daily users among "younger teens." The remarks raised fears that teen Facebook users might be drifting to new messaging services such as Snapchat and WhatsApp.

Facebook Finance Chief David Ebersman said the company did not have an update to share about teen usage during the quarter, though the company noted that overall user "engagement" had increased throughout 2013.

Roughly 61.5 percent of Facebook's 1.23 billion monthly users visited the site every day in the fourth quarter, an increase from the 58.3 percent ration in the fourth quarter of 2012.

"The engagement on their site is going up and they're recapturing people on Instagram, so they're not losing people," said Jefferies analyst Brian Pitz, referring to the Facebook-owned mobile photo-sharing service.

Overall revenue in the fourth quarter rose to $2.585 billion, compared with $1.585 billion in the year-ago period and above the $2.33 billion expected by analysts polled by Thomson Reuters I/B/E/S.

Ebersman said that expenses in the coming year would likely increase around 35 percent to 40 percent. He did not provide a revenue forecast for 2014.

Facebook reported net income of $523 million, or 20 cents a share, versus $64 million or 3 cents a share in the year-ago period. Excluding certain items, Facebook said it earned 31 cents a share, beating the 27 cents per share that analysts were expecting.

(Editing by Matthew Lewis and Lisa Shumaker)

FILED UNDER:
Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.

  • Most Popular
  • Most Shared

Tech Results

Reuters Showcase

Cyber Attack

Cyber Attack

China-backed hackers may have infiltrated Apple's iCloud - blog.  Full Article 

Fat Paycheck

Fat Paycheck

New Microsoft CEO Nadella's pay tops $80 mln with big stock awards.  Full Article 

Court Case

Court Case

Facebook sues lawyers for pursuing dubious Ceglia lawsuit.  Full Article 

Online Security

Online Security

Wall Street urges U.S. regulators' joint cybersecurity approach  Full Article 

Facebook Stake

Facebook Stake

Fidelity Contrafund loads up on Facebook and it pays off  Full Article 

App for Kids

App for Kids

New apps bring kids' playtime back to real world  Full Article 

'Robotic Eyes'

'Robotic Eyes'

Helps Japan's bipedal bot run faster.  Video 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device.  Full Coverage