Business

Facebook reports higher earnings as mobile use grows

Facebook reported higher earnings in the first three months of 2013, as the company focuses on catering to its growing number of mobile users.

30% of advertising revenue came from mobile ads

Facebook unveiled its new Home service last month at its headquarters in Menlo Park, Calif. The service is one of several initiatives that the company is working on to cater to its growing base of mobile users. (Marcio Jose Sanchez/Associated Press)

Facebook reported higher earnings in the first three months of 2013, as the social media company focuses on catering to its growing number of mobile users.

The company's net income for the first quarter was $219 million US, or nine cents per share, up from the $205 million, or nine cents per share, Facebook made a year earlier before it went public.

Revenue for the first quarter grew to $1.46 billion US, 38 per cent higher than last year. Advertising, which makes up 85 per cent of its total revenue, brought in $1.25 billion.

Almost a third of advertising revenue came from mobile ads, as a growing number of Facebook users access the site through their smartphones.

The company reported that there are now 751 million mobile users who log in at least once per month, a 54 per cent increase from last 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 per cent increase in Facebook's mobile ad revenue, even though the company's overall ad revenue for the period dipped six per cent 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.

'They are making the transition to mobile faster than anyone anticipated. It seems like they are delivering.'—Analyst Arvind Bhatia

Facebook started showing mobile advertisements in early 2012.

During a conference call Wednesday, Facebook CEO Mark Zuckerberg said that engaging mobile users would be a key area moving forward.

He talked about Facebook Home, a family of apps released last month that allows Android-based phone users to view and post content from their home screens.

"It really brings your phone to life," Zuckerberg said. "Over the next few months, we hope to push this out more broadly."

Zuckerberg also said that the company aims to create higher-quality ads that are more personalized and integrated with Facebook news feed content.

The company’s mobile expansion impressed Sterne Agee analyst Arvind Bhatia. "They are making the transition to mobile faster than anyone anticipated," Bhatia said. "It seems like they are delivering."

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.

Instagram now has 100 million monthly users, compared to 22 million when Facebook acquired the company last year. 

With files from Associated Press

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