Driven by mobile ads, Facebook posts strong profit gains

Social network sees first quarter take of more than $3b overall from ads, with two-thirds of that from mobile ads

SAN FRANCISCO: Facebook on Wednesday reported that its quarterly profit jumped 33.8 per cent from last year to $696 million as ad revenue and membership grew at the leading social network.

The California-based Internet titan said that revenue in the final quarter of last year hit $3.85 billion as the number of active monthly users increased 13 per cent to 1.39 billion.

"We got a lot done in 2014," said Facebook co-founder and chief executive Mark Zuckerberg.

"Our community continues to grow and we're making progress towards connecting the world."

A strong showing in ads served up on smartphones or tablet computers helped Facebook earnings beat analyst forecasts.

Shares sank slightly more than a per cent to $75.40 in after-market trades that followed release of the figures.

Facebook saw its first quarter of taking in more than $3 billion overall from ads, with about two-thirds of that coming from mobile advertising revenue which soared 69 per cent from the same period a year earlier.

An average of 745 million Facebook members daily used mobile devices to visit the social network in December of last year, the company reported.

Facebook said that its properties Instagram, Messenger and WhatsApp recently topped 300 million, 500 million, and 700 million monthly active users respectively.

The net profit including dividends paid to preferred shareholders was $701 million in the fourth quarter.

For the full year, Facebook's profit nearly doubled to $2.9 billion and revenue jumped 58 per cent to $12.8 billion.

Investors may be concerned by an 87 per cent jump in costs and expenses to $2.72 billion at Facebook that shrank the social networks profit margin to 29 per cent from 44 per cent in the same period a year earlier.

Advertising and mobile

Facebook's growth has helped it become a major player in online advertising. According to the research firm eMarketer, Facebook accounted for a 7.75 per cent share of all global digital ad revenues last year, an increase from 5.75 per cent in 2013. That compares with 31 per cent for Google.

In mobile, Facebook's share was 18.4 per cent in 2014, the research firm said.

Zuckerberg in prior earnings calls has laid out a long-term vision for Facebook that includes pouring resources into technology such as virtual reality and ways for Internet service to reach more people in developing countries.

Facebook said Monday it is testing a lightweight version of its mobile app for mobile phones with poor-quality Internet connections in emerging markets.

A spokesperson told AFP that the "Facebook Lite" Android app is designed "for people on 2G (second-generation) connections or in areas of limited Internet accessibility."

Most of Facebook's growth is coming from emerging markets, but many people lack the phones or computers needed for the full-featured app.