NEW YORK (AP) — A year ago, Facebook was just testing the waters of mobile advertising, causing plenty of headaches for investors ahead of its massive initial public offering.
It has since eased those worries.
On Wednesday the world's biggest social networking company said nearly a third of its advertising revenue came from mobile in the first three months of the year, helping to push total revenue up 38 percent to surpass Wall Street's expectations.
"They are making the transition to mobile faster than anyone anticipated," said Sterne Agee analyst Arvind Bhatia. "It seems like they are delivering."
Facebook Inc. said Wednesday that its net income was $219 million, or 9 cents per share, in the January-March period. That's up from $205 million, or 9 cents per share, in the same period a year ago, when it was still private.
Revenue grew to $1.46 billion from $1.06 billion, above analysts' expectations of $1.44 billion.
Excluding special items, mainly related to stock compensation expenses, Facebook earned 12 cents per share, matching the average of analyst expectations, according to FactSet.
Menlo Park, Calif.-based Facebook said that its mobile advertising revenue was 30 percent of its total ad revenue in the first quarter, amounting to $375 million. That's up from 23 percent, or $306 million, in the fourth quarter. In the third quarter — the first time it disclosed such figures — the company generated 14 percent, or $153 million, of its advertising revenue from mobile.
Investors had been worried about Facebook's ability to grow mobile revenue since before its initial public offering in May 2012. That's because although the number of people who access Facebook on smartphones and tablet computers has been growing quickly, Facebook didn't begin showing ads to those users until last year.
David Ebersman, Facebook's chief financial officer, said most advertisers did not specify that their ads be shown only on desktop computers or only on mobile devices, "rather they put their ads into our system and allow us to show the ads on whatever device where the ads will perform best."
Bhatia thinks Facebook will fare even better on mobile devices once Zuckerberg firms up its plan to make money from the growing audience checking into Instagram, a photo-sharing service that the company bought last year for $521 million. The analyst believes Instagram will play a bigger role in Facebook's business next year.
Wedbush analyst Michael Pachter said the results are likely to quiet skeptics who doubted Facebook's ability to mine its growing mobile traffic for revenue. He was particularly impressed by the 23 percent increase in Facebook's mobile ad revenue, even though the company's overall ad revenue for the period dipped 6 percent from the final three months of last year.
"Their mobile business is probably bigger than any mobile business on the planet other than the (wireless telecommunications) carriers and Google," Pachter said.