Facebook hasn’t lost its mobile groove. The social networking giant on Tuesday
reported that revenue in the third quarter increased 59% from a year ago to $3.2 billion, powered
by strong mobile ad sales.
The company earned 43 cents per share, excluding one-time charges -- up from 27 cents a share in the year-earlier period. Wall Street analysts, on average, had expected
Facebook to report a profit of 40 cents on revenue of $3.1 billion
"This has been a good quarter with strong results," said Facebook CEO Mark Zuckerberg in the earnings release. "We continue
to focus on serving our community well and continue to invest in connecting the world over the next decade."
Mobile advertising made up 66% of Facebook’s total advertising of $2.96
billion in the quarter -- up from 49% a year ago -- and 62% in the prior quarter. The mobile surge partly reflects the popularity of the company’s app-install ads and the launch of its Audience
Network in April, extending ad-serving and targeting to third-party mobile apps.
Mobile monthly active users on Facebook grew 29% to 1.12 billion as of September 30, while mobile daily users
were up 39% to 703 million. Those rates easily outpaced overall growth of 14% in monthly active users to 1.35 billion, with a 19% increase in daily users to 864 million.
Facebook's share of
the $36.5 billion worldwide mobile ad spending is expected to reach 20.4% this year -- up from 16.5% in 2013, according to eMarketer. That will make it second only to market leader Google, with an
estimated 44.6% this year.
In the U.S. Facebook is expected to claim 17.9% of the $18.75 billion mobile ad market, up from 15.8% in 2013. Google will remain the dominant player, however --
with 37.7% share, per eMarketer. Facebook is expected to account for 9.7% of U.S. digital ad spending overall of $50.7 billion.
Facebook’s launch of a reengineered Atlas platform last
month, allowing it to serve and track advertising on Web sites beyond its walls, could help the company grab an even larger piece of the digital ad market over time.
While the rollout of Atlas
may not have played a part in third-quarter results, JPMorgan analyst Doug Anmuth indicated in a research note Tuesday that Facebook’s saw increased ad activity from auto and CPG brands
including Mercedes-Benz, Acura, BMW, Lays and Kellogg’s.
During the earnings conference call, Facebook CFO David Wehner said the average price per ad on Facebook increased 274% from last
year, mainly because of the redesign of the right-column ads on the desktop. Total impressions, however, fell 56% because fewer right-column ads were shown.
Facebook offered little
new insight on early results from newer initiatives like video advertising and advertising on Instagram. COO Sheryl Sandberg reiterated that Facebook continues to roll out video and Instagram
advertising slowly in both cases to insure a good consumer experience. Zuckerberg noted video views overall on the social network averaged over 1 billion a day in the latest quarter.
Along
with advertising, payments and other fees contributed $246 million to Facebook’s revenue, up from $218 million a year ago.