Facebook beats expectations as social network cracks mobile ads

Facebook kicked off the reporting season for US tech majors last night, beating forecasts with its fourth quarter numbers thanks to its success in mobile advertising.

Quarterly revenue at the social network jumped 63% to $2.59 billion, beating analysts’ expectations.

Ad revenue rose 76% to $2.34 billion in the fourth quarter of 2013, with mobile advertising income making up 53% of that figure, up from 23% in the year-ago period. The number of ads declined 8% but the average price per advert soared 92% year-on-year.

Facebook said the US flash sales day ‘Black Friday’ was its single-biggest mobile ad revenue day in the quarter.

Ian Maude, a technology analyst at Enders Analysis, said: “They’re doing phenomenally well – their mobile ad revenue has quadrupled from basically a standing start. All of that is really being powered by the mobile news feed ads, which is a new category really. The news feed ads really work.”

Chief executive Mark Zuckerberg told investors that the company was testing ads in Instagram and was also looking at the possibility of advertising within third party apps.

Zuckerberg said almost half the people who use Facebook now do so from their smart phones, with monthly active users on mobile rising 39% to 945 million in the quarter.

Overall Facebook’s number of monthly active users reached 1.23 billion in the quarter, an increase of 16 % year-over-year, while daily user numbers hit 757 million on average in December, an increase of 22%. Quarterly net income was $523 million, up from $64 million a year earlier.

The strong set of results sent Facebook shares up as much as 10% in afterhours trading, while shares in fellow social networks LinkedIn and Twitter also rose on the news. Fellow US tech titans Google and Amazon will report their quarterly results tonight.

Maude commented: “The story for 2014 is all going to be about mobile – that’s not just true for Facebook its true for all those in the digital sector. I would expect to see very strong growth in Google and Twitter’s number too.”