Facebook Inc delivered its strongest revenue growth in two years, beating Wall Street targets as the Internet company’s mobile ad sales continued to accelerate.
Shares of Facebook surged 12 percent to US$59.98 in after-hours trading on Wednesday.
The world’s largest social networking company said that revenue from mobile ads represented 53 percent of its total advertising revenue in the last three months of the year, or US$1.24 billion, versus the 49 percent proportion that mobile ads represented in the third quarter.
“They’ve cracked the code on mobile,” Sterne, Agee & Leach analyst Arvind Bhatia said.
“Within a little over a year’s time mobile has taken over desktop,” in terms of ad revenue, he said.
Facebook said it now has 1.23 billion monthly users, with 945 million accessing the service on a smartphone or tablet.
Facebook’s newsfeed ads, which inject paid marketing messages straight into a user’s stream of news and content, have boosted Facebook’s revenue and its stock price in recent months. The ads are ideally suited for the smaller screens of smartphones and other mobile devices.
The average price per ad on Facebook has surged 92 percent in the past year, the company said, even as the total number of ad impressions on Facebook declined by 8 percent.
In a conference call with analysts on Wednesday, Facebook chief executive officer Mark Zuckerberg said the focus going forward would be to improve the quality and the relevance of the newsfeed ads, rather than boosting the amount of ads in users’ newsfeeds.
Among the other priorities for the coming year, Zuckerberg said the company would focus on creating new standalone products and on improving Facebook’s nascent search product.
Facebook had spooked some investors in October when it said that it noticed a decrease in daily users among “younger teens.” The remarks raised fears that teen Facebook users might be drifting to new messaging services such as Snapchat and WhatsApp.
Facebook finance chief officer David Ebersman said the company did not have an update to share about teen usage during the quarter, though the company said overall user “engagement” had increased throughout last year.
Roughly 61.5 percent of Facebook’s 1.23 billion monthly users visited the site every day in the fourth quarter, an increase from 58.3 percent in the fourth quarter of 2012.
“The engagement on their site is going up and they’re recapturing people on Instagram, so they’re not losing people,” Jefferies analyst Brian Pitz said, referring to the Facebook-owned mobile photo-sharing service.
Overall revenue in the fourth quarter rose to US$2.585 billion, compared with US$1.585 billion in the year-ago period and above the US$2.33 billion expected by analysts polled by Thomson Reuters I/B/E/S.
Ebersman said expenses in the coming year would likely increase around 35 percent to 40 percent. He did not provide a revenue forecast for this year.
Facebook reported net income of US$523 million, or US$0.20 a share, versus US$64 million or US$0.03 a share, the year before. Excluding certain items, Facebook said it earned US$0.31 a share, beating the US$0.27 per share that analysts were expecting.
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