Facebook rides the mobile wave

FACEBOOK yesterday revealed a massive rise in revenues as the company managed to cash in on its billion members accessing the social network on mobile phones.

Since the company’s controversial initial public offering (IPO) a year ago, it has struggled to convince shareholders that it will be able to grow, as users stop logging on to Facebook on their PCs and shift to smartphones.

However, Facebook said that a better-than-expected 30 per cent of advertising revenues in the first quarter of 2013 had come from mobile. This was up from 23 per cent in the previous quarter, 14 per cent six months previously and nothing a year ago.

The huge increase in Facebook’s mobile advertising sales led to revenues of $1.46bn (£938m), a 38 per cent increase on the same period in 2012. The rise will come as a huge boost to chief executive Mark Zuckerberg, who last year unveiled a strategic shift that saw the social network place far more emphasis on its mobile services.

Facebook, like many of the world’s big technology companies, has had to deal with a rapid shift in user habits as sales of smartphones boom.

In the last few months, Zuckerberg has invested heavily in the company’s mobile apps, including the launch of Facebook Home, software for Android phones that makes the social network much more prominent.

In the months after Facebook’s IPO in May last year, the company’s shares dropped from their $38 float price to less than half of that, but as Zuckerberg has talked up Facebook’s mobile future, its stock has recovered somewhat. Yesterday, the shares hovered at around $27.50 in after-hours trading on Wall Street.

Facebook said that its monthly active users had hit 1.11bn, a rise of 110m in the last six months. The number of people who access Facebook on mobiles per month is now 751m – more than two thirds of the total base – compared to 488m a year ago, which was just over half of users at the time. And almost 200m users do not access the social network from a PC at all.

Zuckerberg said that Instagram – the photo sharing app Facebook acquired for $715m last year – had reached 100m users, a fourfold rise on a year ago. Although Instagram has no revenues, Zuckerberg said he was “really optimistic about the business opportunity there”.

Facebook’s profits rose just slightly to $219m, due to Zuckerberg investing more in the last year.