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Rise in mobile ads pushes up revenue and profit at Facebook

  • Article by: VINDU GOEL
  • New York Times
  • January 29, 2014 - 7:37 PM

 

– Facebook Inc. now makes the majority of its money from mobile advertising, a dramatic shift for a company that got virtually no money from mobile in 2012.

The social networking giant reported Wednesday that 53 percent of its advertising revenue in the fourth quarter came from mobile devices. And at the end of the year, three-quarters of its 1.23 billion global users were accessing the service on a cellphone or tablet.

“I think it’s inarguable that Facebook is a mobile-first company,” Facebook’s chief financial officer, David Ebersman, said in an interview after the results were released.

The ascendance of mobile in usage and advertising cements a trend that has developed over the last several quarters. And it powered strong financial results for the company in the quarter, which ended Dec. 31.

Facebook reported total revenue of $2.59 billion, up from $1.59 billion in the same quarter a year ago. Net income was $523 million, or 20 cents a share, compared with $64 million, or 3 cents a share, in the previous year, when stock compensation costs related to Facebook’s initial public offering depressed results. Both revenue and profits significantly exceeded Wall Street’s expectations.

Shares of the company surged on the news. The stock, which closed down about 3 percent in regular trading before the earnings were released, rose more than 6 percent in after-hours trading.

Given that Facebook had virtually no mobile presence in 2012, the transition is a huge pivot that now puts the company in the forefront of the industry’s shift to serving people on the move.

In an interview, Sheryl Sandberg, Facebook’s chief operating officer, said that the company garners about one out of every five minutes that mobile users are online.

She said the company has also been able to demonstrate to advertisers that buying ads on Facebook delivers results. “Our investments in being able to prove results to marketers have really paid off,” she said.

© 2014 Star Tribune