Facebook 3Q results show mobile ad growth

Associated Press Modified: October 23, 2012 at 7:00 pm •  Published: October 23, 2012
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NEW YORK (AP) — Facebook finally has proof that it can make money from mobile advertising.

As part of Tuesday's third-quarter results, the world's biggest social media company disclosed for the first time that some 14 percent of its ad revenue came from mobile advertising. It started showing ads to users who access Facebook from their phones and tablet computers about six months ago.

Since before the company's initial public offering in May, investors have worried that Facebook isn't taking advantage of its growing mobile user base.

"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."

Tuesday's quarterly financial report —Facebook's second as a public company— sent its stock up $2.53, or 13 percent, to $22.03 in after-hours trading. 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 percent.

Facebook Inc. posted a loss of $59 million, or 2 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 percent to $1.26 billion from $954 million. That's also higher than the $1.23 billion that analysts polled by FactSet had expected.

Facebook's monthly user base grew 26 percent from a year earlier, to 1.01 billion. Some 60 percent of users access Facebook using a mobile device, the company said. At the end of the second quarter, less than 57 percent of its then-955 million users came from mobile devices.

"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," Zuckerberg said. "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 percent from a year earlier. It represented about 86 percent of Facebook's total revenue. In the second quarter, Facebook's ad revenue grew at a slower pace — 28 percent from a year earlier, to $992 million. Baird analyst Colin Sebastian said that besides the mobile progress, the acceleration of ad revenue was a big reason for Facebook's stock price jump.

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