Facebook Inc on Wednesday reported a dip in its quarterly profit, but said revenue surged on mobile advertising gains as its user base neared 1.5 billion.
The world’s biggest social network saw higher expenses cut into its bottom line, as it invests in new technologies and seeks to build a “family” of applications.
Net profit for shareholders dropped 9 percent from the previous year to US$715 million, but total revenue surged 39 percent to US$4.04 billion on big gains from advertising, chiefly from paid messages delivered to mobile devices.
Facebook said monthly active users grew 13 percent year-on-year to 1.49 billion, but the gain was modest from the first quarter when it had 1.44 billion. The number of active mobile users rose to 1.31 billion.
“This was a good quarter for us,” Facebook founder and chief executive Mark Zuckerberg said on a conference call. “We have continued to make good progress in the growth of our community.”
Amid ongoing growth, the company has been expanding its offerings of applications, including the photo-sharing service Instagram, the messaging service WhatsApp and virtual reality firm Oculus VR Inc.
Facebook’s capital spending in the quarter was US$549 million. Its research and development costs were US$1.17 billion.
Overall expenses were up 82 percent, driven in large part by stock compensation linked to its multibillion-dollar acquisition of WhatsApp.
The big gains in revenue came from advertising, up 43 percent from the previous year. Mobile accounted for 76 percent of ad revenue in the quarter, up 62 percent year-on-year and 73 percent quarter-on-quarter.
Facebook itself has been a rising star in online advertising. It accounted for 7.9 percent of worldwide digital ad revenue last year, up from 5.8 percent in 2013, according to research firm eMarketer, which predicts its share will reach 9 percent by the end of the year.
Facebook chief operating officer Sheryl Sandberg said a big growth area for Facebook advertising was video ads, helped by Facebook’s technology that allows marketers to get information on who is viewing the ads and how many are responding by buying the products they see.
“Video ads are a natural part of the Newsfeed experience and we can do targeting in a way that is really unique,” Sandberg said.
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