Facebook earnings better than expected

Written By Unknown on Rabu, 24 Oktober 2012 | 22.39

Facebook's third-quarter results inched past Wall Street's expectations, offering evidence that the company is making inroads in mobile advertising — a longtime concern among investors.

Tuesday's financial results, Facebook's second as a public company, sent its stock sharply higher in after-hours trading.

The stock jumped $1.90, or 9.7 per cent, to $21.40 US after the announcement. Facebook had closed up 18 cents at $19.50 in regular trading on a day that saw the Dow Jones industrial average drop 243 points, or 1.8 per cent.

The world's biggest social media company posted a loss of $59 million, or two cents per share, in the July-September period.

That's down from earnings of $227 million, or 10 cents per share a year ago, when Facebook was still privately held.

Excluding special items, mainly related stock compensation expenses, Facebook Inc. earned $311 million, or 12 cents per share, in the latest quarter, a penny better than what analysts were expecting.

Revenue rose 32 per cent to $1.26 billion from $954 million.

Mobile ad revenue increasing

Analysts had expected earnings of 11 cents per share on revenue of $1.23 billion, according to FactSet.

Facebook's monthly user base grew 26 per cent from a year earlier, to 1.01 billion. Some 60 per cent of users access Facebook using a mobile device, the company said.

"People who use our mobile products are more engaged, and we believe we can increase engagement even further as we continue to introduce new products and improve our platform," said CEO Mark Zuckerberg in a statement.

"At the same time, we are deeply integrating monetization into our product teams in order to build a stronger, more valuable company."

Advertising revenue was $1.09 billion, up 36 per cent from a year earlier. It represented about 86 per cent of Facebook's total revenue.

Revenue from payments and other fees climbed 13 per cent to $176 million. This figure includes Facebook's cut from the virtual items people buy for games they play on the site.

Facebook said it generated 14 per cent of its advertising revenue from mobile ads during the quarter. That amounts to about $152.6 million.

'I want to dispel this myth that Facebook can't make money on mobile.'—Facebook CEO Mark Zuckerberg

This was the first time the company has disclosed a mobile ad revenue figure — a closely watched metric because so many more people use mobile gadgets to access Facebook.

Facebook faces a challenge with mobile advertising: The company must try to show users ads on smaller, mobile screens without annoying or overwhelming them.

"I want to dispel this myth that Facebook can't make money on mobile," said CEO Mark Zuckerberg in a conference call with analysts.

"This may [have seemed] true earlier this year because we hadn't started trying yet but after just six months of ramping up our mobile ads business we're already at a point where 14 per cent of our ad revenue this quarter is for mobile."

Chief financial officer David Ebersman said Facebook had a "solid performance" in the third quarter. Facebook did not provide guidance for the current quarter or beyond, a practice it has maintained since its first earnings report as a public company in late July.

Its stock has lost almost half its value since its initial public offering in May as investors have worried about its ability to raise money from advertising aimed at its one billion users.

The shares were first floated on the Nasdaq at $38, giving the firm — which was touted then as the next Google — a market value of $100 billion.

With files from the CBC

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