Facebook posts blowout quarter, with mobile gains leading the way

Mobile ads account for 41% of overall revenues
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Facebook (NASDAQ:FB) reported second-quarter results that blew past analysts' expectations, driven largely by dramatic improvements in the company's mobile business. Specifically, mobile ads generated 41 percent of Facebook's revenues--far exceeding analyst expectations of 33 percent, according to VentureBeat, and above the 30 percent Facebook reported in the first quarter of this year.

"Nearly half a billion people use Facebook on their phones every day and soon we'll have more revenue on mobile than on desktop," Facebook CEO Mark Zuckerberg said during the company's second-quarter earnings conference call, according to a Seeking Alpha transcript.

Investors roared their approval: Facebook's stock opened up 26 percent, to $33.50 per share, after the company's earnings announcement.

The results indicate that Facebook is well on its way to becoming a "mobile first" company, as Zuckerberg envisioned more than a year ago when he ordered an overhaul of the company's mobile products. Investors had been wary that Facebook would be able to accomplish the task, but the company's progress during the second quarter appeared to quell concerns.

"Finally, the blowout quarter that Facebook bulls have been waiting for," Paul Sweeney, an analyst at Bloomberg Industries, told Bloomberg. "Among many impressive data points, I think investors will focus on the percentage of revenue from mobile of 41 percent, which was well above consensus."

"The time people are spending on mobile devices is increasing dramatically that mobile represents just 2 percent of ad spent globally and 3 percent in the U.S.," said Facebook COO Sheryl Sandberg during the company's earnings conference call. "We have a massive and growing mobile user base. We have an impressive share of mobile time spent and we have one if not the most effective mobile app products. Together this positions us well to lead the mobile app market."

Market research firm eMarketer predicts Facebook will capture 13 percent of the global market for mobile advertising this year, up from 5.4 percent last year. However, eMarketer forecast Facebook will continue to trail the market leader in mobile ads--Google--for the foreseeable future; eMarketer predicts Google will command fully 56 percent of the mobile advertising market this year.

In its second quarter results, Facebook's daily active users (DAUs) reached 699 million, a year-over-year increase of 27 percent, and the company's monthly active users (MAUs) totaled 1.15 billion, an increase of 21 percent year-over-year. But the company's mobile MAUs increased fully 51 percent year-over-year in the second quarter to 819 million, indicating Facebook is growing its mobile user base far more quickly than any other area. The company's mobile DAUs reached 469 million during the second quarter.

As for the company's financials, Facebook notched revenue of $1.81 billion, above analyst expectations of $1.62 billion, according to Bloomberg, and also an increase from the $1.18 billion the company reported in the year-ago quarter. Facebook's net income clocked in at $333 million in the second quarter, a reversal from the $157 million net loss Facebook reported in the second quarter of 2012.

And, importantly, Facebook said it continues to position itself for future growth. "We also continue to innovate around our mobile app products," Sandberg said during the company's call. "In April we launched ad targeting for future trends. This helps marketers, everyone from multinationals to local businesses, reach people in emerging markets who they could not easily reach before. While these ad markets are not especially large today, they'll become increasingly important in the years to come."

Facebook recently revealed that its streamlined Facebook for Every Phone application--targeted generally at feature phones in emerging markets--has eclipsed the 100-million-active-user benchmark, corresponding to roughly one out of every eight of the social network's mobile users worldwide.

For more:
- see this release
- see this VentureBeat article
- see this Bloomberg article
- see this Reuters article

Special Report: Wireless in the second quarter of 2013

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