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Facebook Rides the Mobile Wave as Teen Usage Declines

  |  October 31, 2013   |  Comments

Mobile accounted for 49 percent of Facebook's revenue, pushing net income to $425 million on $2.02 billion in revenue during the last quarter.

So much for those concerns about making money off mobile. Facebook’s road to financial resilience is being paved with revenues from mobile ads.

During the last quarter, Facebook reached “new milestones as a mobile company,” says chief executive Mark Zuckerberg. “Now 49 percent of our revenue comes from mobile and 48 percent of the people using Facebook on any given day are only accessing it from mobile.”

Facebook’s revenue jumped to $2.02 billion, up 60 percent from the same comparable quarter a year ago. It also swung from a net loss of $59 million in the third quarter of 2012 to $425 million in net income during the most recently closed quarter.

Mobile drove the vast majority of those year-over-year gains, pushing total advertising revenue up 66 percent to $1.8 billion.

While analysts are applauding Facebook’s latest results, company stock remains flat. An initial 15 percent spike in value was erased following an earnings call in which executives admitted that teenagers are using the service less.

Chief financial officer David Ebersman tells analysts that usage among teens in the U.S. was “stable” from the previous quarter but adds that Facebook “did see a decrease in daily users specifically among younger teens.”

Ebersman couched his comments in somewhat uncertain terms, calling the drop in usage of “questionable statistical significance.” Although the admission came hesitantly amid heavy scrutiny, it was equally deliberate on the part of Facebook’s executive team. “We wanted to share this with you now since we get a lot of questions about teens,” Ebersman adds.

Teens and tweens aside, everything else at Facebook is up. Daily active users (DAUs) are up 25 percent from the same quarter a year ago to 728 million and monthly active users (MAUs) jumped 18 percent to 1.19 billion.

Numbers are even higher under the umbrella of mobile, with mobile MAUs up 45 percent to 874 million and mobile DAUs came in at an average of 507 million during the quarter. Overall average revenue per user jumped 33 percent to $1.72, says Ebersman.

Zuckerberg also reiterated Facebook’s plan to grow by focusing on improving the quality of ads instead of simply increasing the number of ads it serves.

"Most people probably wouldn't expect to engage with ads that often, so I think it's a great sign that people are finding ads useful and they are adding value to the experience on Facebook,” Zuckerberg says.

Chief operating officer Sheryl Sandberg effused further confidence in Facebook’s ability to exploit the ongoing shift to mobile. “Our results today show that we are benefitting from this shift to mobile, and we believe this shift will continue and will continue to benefit us,” she says. “Today, mobile represents 12 percent of consumers’ media time, but it’s only 3 percent of ad budgets.”

While Sandberg didn’t reveal details or plans for Facebook's long-awaited video ad product, she did get creative in her response to a question about how Facebook might implement such an ad unit in the future.

“We do have a video ad product today, because anyone can embed a video in a page post ad,” she says. “We are actually seeing very good results, particularly around entertainment and media. This is driving some of our ad spend and the area remains pretty exciting because this is a very compelling way for marketers to tell their story.”

Facebook ended the quarter with $9.33 billion in cash and cash equivalents.

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Matt Kapko

Matt Kapko has been writing about mobile since 2006, before it became cool. Based in Long Beach, CA, he has covered mobile entertainment, digital media, marketing, and advertising for several business media outlets. A former editor and reporter for RCR Wireless News, paidContent, and iMedia Connection, Matt is a regular freelance reporter for ClickZ. You can follow Matt on Twitter at @MattKapko or drop him a line at matt@kapko.co.

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