Mobile ad revenue lifts Facebook past Wall Street targets

Wed Jan 29, 2014 9:52pm EST
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By Alexei Oreskovic

SAN FRANCISCO (Reuters) - Facebook Inc delivered its strongest revenue growth in two years, beating Wall Street targets as the Internet company's mobile ad sales continued to accelerate.

Shares of Facebook surged 12 percent to $59.98 in after-hours trading on Wednesday.

The world's largest social networking company said that revenue from mobile ads represented 53 percent of its total advertising revenue in the last three months of the year, or $1.24 billion, versus the 49 percent proportion that mobile ads represented in the third quarter.

"They've cracked the code on mobile," said Arvind Bhatia, an analyst at Sterne, Agee & Leach. "Within a little over a year's time mobile has taken over desktop," in terms of ad revenue he said.

Facebook said it now has 1.23 billion monthly users, with 945 million accessing the service on a smartphone or tablet.

Facebook's newsfeed ads, which inject paid marketing messages straight into a user's stream of news and content, have boosted Facebook's revenue and its stock price in recent months. The ads are ideally suited for the smaller-sized screens of smartphones and other mobile devices.

The average price per ad on Facebook has surged 92 percent in the past year, the company said, even as the total number of ad impressions on Facebook declined 8 percent.

In a conference call with analysts on Wednesday, Facebook Chief Executive Officer Mark Zuckerberg said the focus going forward was to improve the quality and the relevance of the newsfeed ads, rather than boosting the amount of ads in users' newsfeed.   Continued...

The Facebook logo is pictured in the Facebook headquarters in Menlo Park, California January 29, 2013. REUTERS/Robert Galbraith