Facebook (NASDAQ:FB) reported sharp increases in the number of mobile users accessing the social networking site in the third quarter as well as a bump in mobile advertising revenue. However, the company's shares fell after it said it did not plan to boost the frequency of ads shown to users.
Facebook reported net income of $425 million, a reversal of the $59 million it lost in the year-ago period. The company said total revenue for the quarter was $2.02 billion, an increase of 60 percent from the third quarter of 2012 and higher than analysts' projections of $1.91 billion, according to data compiled by Bloomberg.
Most interestingly, sales from mobile promotions made up 49 percent of total ad revenue (which was $1.8 billion) in the third quarter, beating out the 41 percent mark Facebook recorded in the second quarter and up dramatically from 14 percent in the year-ago period.
Facebook said daily active users were 728 million on average for September 2013, an increase of 25 percent. Total monthly active users were 1.19 billion as of Sept. 30, an increase of 18 percent year-over-year. Further, Facebook said mobile monthly active users were 874 million as of Sept. 30, an increase of 45 percent year-over-year. Mobile daily active were 507 million on average for September 2013.
Facebook's mobile advertising business has been a key metric for investors since the company's May 2012 initial public offering, as they have worried the company will not be able to monetize its growth on smartphones and tablets. Facebook silenced the market with its second-quarter results, and mobile seems to have continued growing in the third quarter.
However, investors were less pleased with CFO David Ebersman's comments that the company doesn't expect to "significantly increase" the share of ads in a user's news feed from what it is now. He said Facebook will look to on improve the quality and relevance of the ads to drive up prices.
Additionally, Ebersman acknowledged that Facebook's performance among U.S. teens is on the decline. "Our best analysis on youth engagement in the U.S. reveals that usage of Facebook among U.S. teens overall was stable from Q2 to Q3, but we did see a decrease in daily users, specifically among younger teens," he said.
Still, Facebook seems focused on mobile and expanding Internet access worldwide as ways to drive growth. Earlier this month the company acquired Israeli startup Onavo (a 2012 Fierce 15 winner), which helps iOS and Android users reduce the amount of data they consume via their apps. The acquisition fits with Facebook's larger mission of bringing Internet access to developing markets via mobile devices and services.
In August Facebook forged a partnership with industry heavyweights with Ericsson, MediaTek, Nokia (NYSE:NOK), Opera Software, Qualcomm (NASDAQ:QCOM) and Samsung Electronics to launch Internet.org, a coalition dedicated to expanding online access via mobile. ''We expect Onavo's data compression technology to play a central role in our mission to connect more people to the Internet, and their analytic tools will help us provide better, more efficient mobile products,'' a Facebook spokesman told The New York Times earlier this month regarding the Onavo deal.
For more:
- see this release
- see this WSJ article (sub. req.)
- see this Reuters article
- see this Bloomberg article
- see this CNET article
- see this separate CNET article
- see this AllThingsD article
- see this separate AllThingsD article
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