By Douglas MacMillan & Brian Womack - Jul 25, 2013 12:34 AM GMT+0400
Facebook Inc. (FB) reported sales and profit that exceeded estimates as the operator of the world’s most popular social-networking service lured more advertisers to its mobile services, sending shares up as much as 19 percent.
Second-quarter revenue rose 53 percent to $1.81 billion, the company said in a statement today. Second-quarter profit excluding certain items was $488 million, or 19 cents a share. Analysts had projected profit of 14 cents on sales of $1.62 billion on average, according to datacompiled by Bloomberg.
A pedestrian walks past the Facebook Inc. 'like' logo displayed on a sign at the entrance to Facebook headquarters in Menlo Park, California. Photographer: David Paul Morris/Bloomberg
Mobile made up 41 percent of advertising dollars in the second quarter, up from 30 percent in the previous period. Chief Executive Officer Mark Zuckerberg’s push to make advertising for smartphones and tablets a priority is starting to pay off, as users increasingly access Facebook on mobile devices.
“Finally the blowout quarter that Facebook bulls have been waiting for,” said Paul Sweeney, an analyst at Bloomberg Industries. “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.”
Shares of Facebook, based in Menlo Park, California, climbed as much as 19 percent in extended trading. The stock advanced 1.5 percent to $26.51 at the close in New York, leaving it down 30 percent since an initial public offering last year.
Mobile Push
Facebook is projected to take 13 percent of the global mobile-advertising market this year, up from 5.4 percent last year according to EMarketer Inc. Still, the company remains a distant No. 2 to Google Inc. (GOOG), which is expected to grab 56 percent of the market in 2013.
“This quarter represents a strong validation that we’re effectively navigating the shift to mobile,”David Ebersman, Facebook’s chief financial officer, said in an interview. “All the investments we’ve been making in the business have been paying off.”
Net income attributable to shareholders was $333 million from a loss a year earlier.
Facebook has stepped up efforts with its mobile services, including updates to its smartphone applications and a new video feature for photo-sharing service Instagram. Investors’ concern that the company wasn’t shifting its focus fast enough toward wireless devices weighed on the shares in the four months following its market debut.
The number of mobile users expanded 51 percent to 819 million during the quarter. The total number of Facebook members was 1.15 billion, compared with 1.11 billion in the earlier period.
Marketing Tools
Facebook is also making improvements to its advertising tools for marketers. The company said last month it intends to cut its 27 ad units by more than half, making the promotion-buying process more simple and efficient.
The social-networking provider has been wooing more large advertisers. In April, Facebook won back General Motors Co. as a customer almost a year after the automaker said it was pulling ads off the service.
“They’re getting better on their execution in the business of selling advertising,” said Martin Pyykkonen, an analyst at Wedge Partners in Greenwood Village, Colorado. “There’s a long way to go, but things are going in the right direction.”
To contact the reporters on this story: Douglas MacMillan in San Francisco at dmacmillan3@bloomberg.net;
Brian Womack in San Francisco at bwomack1@bloomberg.net
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