Facebook vows to improve mobile experience after $157M loss

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Facebook reported net losses of $157 million in the quarter ending June 30, its first quarter as a public company, but vowed to right the ship with the introduction of new and improved mobile social networking experiences.

Facebook chalked up the second quarter loss to $1.3 billion in share-based compensation and payroll tax expenses related to its May IPO. Revenues for the quarter increased 32 percent to $1.18 billion from $895 million a year ago--advertising generated 84 percent of the firm's revenues, growing to $992 million, up 28 percent year over year.

Facebook now boasts 955 million monthly active users worldwide, up 29 percent over a year ago, with daily active users topping 552 million, a 32 percent year-over-year increase. Mobile monthly active users reached 543 million, surging 67 percent over year-ago totals. Facebook added that 58.86 percent of its total userbase now accesses the platform via mobile device. "On average, mobile users are around 20 percent more likely to use Facebook on any given day," co-founder and CEO Mark Zuckerberg said.

Facebook will pin its turnaround hopes on mobile services. "We will develop new products, particularly in mobile," said COO Sheryl Sandberg, while Zuckerberg said, "Facebook is the most used app on basically every mobile platform. So when we think about what we want to do right now, we want to increase the depth of experience in addition to just growing users. We want to not just have applications that people use, but also be deeply integrated into these systems as much as possible, and develop an ecosystem where other apps can be built on top of Facebook." Zuckerberg pointed to Apple's (NASDAQ:AAPL) forthcoming iOS 6 mobile operating system update, which will include deep Facebook integration.

Facebook also will turn to mobile advertising to improve its financial fortunes. Desktop display ads and Sponsored Stories promotions integrated into users' News Feeds make up the bulk of its existing advertising revenues, but in the weeks before and after its IPO, the company has accelerated its mobile ad efforts, and last month introduced a mobile-only version of Sponsored Stories enabling marketers to target consumers exclusively on smartphones and tablets. "By the end of June, Sponsored Stories in News Feed was at a run rate of over $1 million per day in revenue, and about half of that is coming from mobile," Zuckerberg said.

Analysts weren't impressed, however. "I think Facebook is going to have to find a different way to monetize mobile that isn't about little display ads," Melissa Parrish, an analyst at Forrester Research, told IDG News in reference to Sponsored Stories. Altimeter Group analyst Chris Silva called Sponsored Stories "blunt instruments," adding "Facebook is leading now for lack of anybody coming along and innovating."

Zuckerberg additionally shot down revived rumors of a branded Facebook smartphone. Hours prior to Thursday's release of Facebook's quarterly earnings statement, Bloomberg reported the company is developing a mobile device in partnership with manufacturer HTC, adding Facebook is concurrently building its own mobile operating system to power the phone. Not so, Zuckerberg said: "There are a lot of things you can build in other operating systems as well that aren't really taking, that aren't really like building out a whole phone, which wouldn't make much sense for us to do."

For more:
- Read this release
- Read this IDG News article
- Read this ABC News article
- Read this VentureBeat article

Related articles:
Report: Facebook building own mobile OS, branded HTC phone coming in 2013
Analyst: Facebook mobile ad revenues could top $1 billion a year
Report: Facebook to target mobile advertising based on app usage
Facebook launches mobile-only Sponsored Stories ads
Facebook turns to mobile ads to justify $16B IPO hype

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