Facebook asserts its success on mobile with another strong quarter

Zach Miners
30 January, 2014
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More than half of Facebook’s ad sales came from mobile devices in the fourth quarter, showing continued strength in the site’s ability to monetise its service on smaller screens.

Total revenue for the quarter ended 31 December was US$2.59 billion, a 63 percent increase from the same period the previous year, the company reported on Wednesday. Facebook’s sales beat analysts’ expectations of US$2.33 billion, as polled by Thomson Reuters.

Net income for the social media company was US$523 million, a more than 700 percent increase from the fourth quarter in 2012. Earnings per share was US$0.20. Excluding share-based compensation expenses and related payroll tax expenses and adjustments, earnings per share was US$0.31, topping analyst expectations of US$0.27.

Facebook generated sales of US$2.34 billion from advertising, a 76 percent increase from the previous year. Of its total ad sales, 53 percent came from ads placed on mobile devices, the company reported. During the same period in 2012, only 23 percent of the company’s advertising revenue was derived from mobile.

“It was a great end to the year for Facebook,” CEO Mark Zuckerberg said in a statement.

Facebook makes the majority of its money from advertising and the company has been pressured to raise its ad revenues specifically on mobile devices as more people migrate away from desktop PCs in favour of devices like smartphones and tablets.

Over the past year, Facebook has made considerable progress in chasing mobile ad dollars. In the previous quarter Facebook said roughly 49 percent of its ad sales came from mobile; Wednesday’s results mark the first time the company has crossed the 50 percent mark.

The company has several different products for monetising on mobile, including mobile app install ads, which direct users out of Facebook and into Apple or Google’s app stores.

One potential issue hanging over Facebook’s business is the extent to which young people – teens specifically – might be growing tired of it. During the company’s previous earnings call in October, executives reported that Facebook was seeing a decline in the number of daily users among younger teenagers. The concern is that while younger people may not be leaving Facebook outright in droves, they could prefer rival services like Snapchat or Twitter for certain activities. Such a scenario could weaken Facebook’s ability to attract advertisers.

Facebook did not address that issue in its announcement, though it is likely to face questions on the matter when Zuckerberg and other executives take questions from investors and financial analysts. Facebook could also be asked to clarify which types of ad products specifically on mobile helped to generate the bulk of its revenue there and whether the gains came from more ads, or improved ads.

The company did grow its monthly active users overall by 16 percent to 1.23 billion. The company also grew its daily active users by 22 percent, but it did not break them down by age.

For the full year, Facebook’s revenue was US$7.87 billion, a 55 percent increase from its sales in 2012.

Facebook’s stock was trading at US$53.53 after the market closed, down slightly from closing at US$55.14 on Tuesday.

by Zach Miners, IDG News Service

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