Facebook (NASDAQ:FB) saw a surge in mobile advertising revenue in the first quarter and the social network said it now counts more than 1 billion mobile monthly active users.
Overall, Facebook said revenue in the first quarter jumped 72 percent to $2.5 billion, which beat the average analyst estimate of $2.36 billion, according to data compiled by Bloomberg. Additionally, Facebook's net income almost tripled to $642 million, up from $219 million in the year-ago period.
The vast majority of Facebook's revenue comes from advertising, and ad revenue clocked in at $2.27 billion, up 82 percent year-over-year. Mobile is becoming an increasingly dominant part of that equation: Facebook now gets 59 percent of its advertising revenue from mobile, up from 53 percent the fourth quarter and a huge jump from 30 percent in the year-ago period.
"Quarter after quarter Facebook has fairly easily beaten expectations," Gartner analyst Brian Blau told Bloomberg. "They clearly have a handle on their mobile business."
Facebook counted 1.01 billion mobile monthly active users as of March 31, an increase of 34 percent year-over-year.
"The fact that we have a mobile ad product that we've added into the News Feed, and we continue to see strong mobile ad performance--our ads work, and they're working for marketers," COO Sheryl Sandberg said in an interview with Re/code.
Facebook will reportedly launch its own mobile advertising network later this month, according to multiple reports. The action would put Facebook in direct competition with Google's (NASDAQ: GOOG) AdMob, Millennial Media, Apple's (NASDAQ: AAPL) iAd and other mobile ad networks. Re/code, which first reported the news, said Facebook has long been considering an ad network, but waited until its mobile ad business was up and running before it decided to launch one.
Forrester Research analyst Nate Elliot told The Verge he was disappointed with Facebook's disclosures with it earnings: "Today was most notable for what Facebook didn't say: They didn't give an update on teen usage, they didn't announce video ads, and they didn't announce a mobile ad network."
Earlier this month Google reported first-quarter revenue that missed analysts' expectations, as the company's core advertising business continues to grapple with a decline in how much advertisers pay per click amid a shift in computing to mobile. Google's total paid advertising clicks increased 26 percent year-over-year, but the amount Google gets paid per click dropped 9 percent compared to the year-ago period. Google, like other advertisers, gets less money per click on smartphones than on PCs.
Nikesh Arora, Google's chief business officer, said on an earnings conference call that Google is not that worried about the shift to mobile. "I've had a firm belief, and continue to hold onto it, that mobile pricing has to be better than desktop pricing," he said, adding that in mobile advertisers can often access users' location. "The more you know, the more effective the advertising," he said.
Facebook also said that CFO David Ebersman will step down and will be replaced by David Wehner, the former Zynga CFO who has been Facebook's second-in-command finance executive.
For more:
- see this release
- see this Bloomberg article
- see this Fortune article
- see this The Verge article
- see this Re/code article
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