Share this article

print logo

Facebook’s revenue, profit top estimates as mobile ads surge

SAN FRANCISCO — Facebook reported quarterly revenue that topped analysts’ estimates, fueled by the mobile-advertising business that the company is now expanding beyond its main social network.

Facebook’s fourth-quarter sales totaled $3.85 billion, exceeding the average analysts’ prediction of $3.77 billion, according to data compiled by Bloomberg. The percentage of ad sales from mobile phones was 69 percent, up from 66 percent in the third quarter, the company said in a statement Wednesday.

Profit excluding some items was 54 cents a share, compared with 48 cents projected on average by analysts.

The results indicate Facebook is making some progress in building an ad-sales machine beyond its main website where users connect with their friends. The Menlo Park, California-based company is now increasingly selling promotions on mobile applications and sites across the Web, complete with new technology to track individuals’ responses to the ads no matter what device they’re using. The move has helped boost revenue, even as Facebook has warned about increased spending on new initiatives and acquisitions such as Oculus VR Inc. and WhatsApp Inc.

Facebook shares rose 46 cents, or 0.61 percent, to $76.24. The stock climbed 43 percent last year, compared with an 11 percent gain in the Standard & Poor’s 500 Index.

Net income rose to $701 million in the fourth quarter, up 34 percent from $523 million a year ago. Revenue increased 49 percent from $2.59 billion a year ago.

The growth was slower than in the fourth quarter a year earlier, when sales jumped 63 percent. Facebook user growth also slowed, with the company reporting 1.39 billion users, up 3 percent from 1.35 billion in the prior quarter.

In addition, expenses rose to $2.72 billion, up 87 percent from a year earlier.

Facebook Chief Financial Officer David Wehner said in October that the company’s fourth-quarter revenue growth would face a tough comparison to a year earlier. That’s because the last quarter of 2013 was the first holiday season where Facebook rolled out ads in members’ News Feeds on a large scale, which helped spur results at the time.

“I think the market was looking for a much bigger beat,” Daniel Ernst, an analyst at Hudson Square Research, said.

Currency swings also bit into results. Excluding the impact of foreign exchange rates, revenue would have increased by 53 percent, Facebook said.

Facebook Chief Executive Officer Mark Zuckerberg last year laid out a plan for how his company is going to make money over time. That included building out its advertising business over the next three years, focusing especially on video. Within five years, the company would have figured out how to make large businesses out of photo-sharing app Instagram and messaging apps WhatsApp and Facebook Messenger. In 10 years, Zuckerberg has said he wants to have connected the remainder of the world’s population to the Internet.

In December, Instagram said it has 300 million users, more than that of Twitter Inc. Earlier this month, WhatsApp said it has 700 million, closer to the 1 billion mark that Zuckerberg has said will be the trigger to start trying to profit off of it.