Facebook posts record profits

 
Oliver Smith
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FACEBOOK beat all expectations last night with the revelation that its mobile advertising, a revenue stream that barely existed a year ago, has seen massive growth.

Mobile revenues for the social giant have surged more than 500 per cent in the past year, hitting $988m (£617m) in the third quarter, from just $150m when Facebook began its push into mobile last year.

Facebook’s shares climbed up to 15 per cent in after-hours trading on the strong mobile performance and the company’s record $425m profit for the quarter, pushing the social network’s stock as high as $56.45.

During Facebook’s earnings call the, firm disappointed some investors, however, by revealing that its demographic share of young US teens declined during the third quarter.

Young teenagers are seen as a bellwether of consumer taste as it is this age group that will often make or break a new social service through their level of engagement. Facebook has recently altered its terms for under-18s to allow younger users to share more content.

Facebook also announced that adverts as a percentage of users’ newsfeed content will not increase further, meaning revenue growth will rely on the service’s user base increasing rather than the number of adverts.

Facebook’s chief executive Mark Zuckerberg described the strong results as proof the company is well positioned to complete its goals: “We continue to see strong overall engagement and are making strong progress on our strategy… We’ve also reached new milestones on mobile.”

Overall revenue grew 60 per cent year-on-year to $2.02bn during the quarter ending 30 September, well above analyst expectations of $1.91bn according to Reuters.

Facebook’s monthly active users hit 1.19bn in September, an 18 per cent increase on the same period last year.

But mobile was the star of the show, with 45 per cent user growth over the past year, reaching 874m mobile monthly active users, who generated 49 per cent of Facebook advertising revenue for the quarter.

The blockbuster results lay strong ground for Twitter, which is currently on an investor roadshow ahead of a planned float next month.

Revenues up 60% to $2.02bn

Monthly active users up 18% to 1.9bn

Net profit of $425m (from a $59m loss last year)

Mobile now 49% of ad revenues