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Facebook’s mobile users are checking in, uploading photos and liking posts at record rates. And that, in turn, is attracting advertisers who pushed up Facebook’s revenue and profit.
The world’s largest social network said nearly 84 percent of the 890 million people who used its service daily did so on a mobile phone. Nearly 86 percent of the 1.39 billion people who accessed Facebook each month did so on a mobile device as well, a new record for the company.
Advertisers followed those numbers. Mobile ads accounted for about 69 percent of the company’s $3.85 billion in revenue. Overall, the company’s sales jumped nearly 49 percent from the same time a year ago.
Those numbers underscore the Menlo Park, Calif., company’s increasing reliance on mobile devices for its business. Much of the technology industry has become fixated on smartphones and tablets, as people throughout the world switch from desktop computers. Investors are now paying more attention to the mobile aspects of Facebook and its competitors. Few companies have successfully navigated the switch to mobile devices as effectively as social networks, like Facebook and Twitter.
As Facebook has shifted its efforts to mobile devices, advertising has followed suit. Last year, Facebook accounted for more than 18 percent of global advertising spent on mobile devices, according to industry researcher eMarketer; when the company went public in 2012, its mobile advertising revenue was negligible. Google still commands the most spending from advertisers, with more than double the amount spent on Facebook.
Part of Facebook’s success has been its focus on video ads, particularly on mobile devices. So far, Facebook has said response from users and advertisers has been strong. Half of all people who visit Facebook daily watch at least one video per day, Chief Operating Officer Sheryl Sandberg said during a conference call. In addition, over 65 percent of videos are watched on mobile devices. “Marketers have followed this trend and are using video to help people discover and learn about their brands,” she said.
The company has been spending big in the past couple of years to gain a stronger foothold in the mobile device arena. In the last year alone, it bought the messaging service WhatsApp for more than $19 billion and virtual reality goggles maker Oculus VR for $2 billion. Both companies approach mobile devices in different ways, offering customers an easier way to send missives to one another with WhatsApp, or interact with movies, games and other programs using a mobile device powered by Oculus software.
But Mark Zuckerberg, Facebook’s CEO, warned advertising won’t be shifting toward its newest efforts anytime soon. To him, WhatsApp and the company’s other communication service Messenger are like Facebook was about seven years ago, when the company was seeking the best way to advertise to users. “We’re going to have to go through a whole cycle of figuring out how [users interact with businesses] before it really makes sense to start monetizing them in a big way,” he said.
Hey big spender
Facebook warned in October that it will increase its already heavy spending in these and other efforts, spooking investors. The company said costs in the fourth quarter grew to $2.72 billion, up 87 percent from the same time a year earlier. Spending is expected to grow 55 percent to 70 percent from last year, the company said. Spending for the year will be between $2.7 billion and $3.2 billion.
Overall revenue hit $3.85 billion for the company’s fourth quarter, up nearly 49 percent from the same time a year ago and above the $3.77 billion expected by analysts. Profit jumped to $701 million, up 34 percent from the same time a year ago.
After adjustments for items such as stock-based compensation, Facebook said it earned 54 cents per share, above the 49 cents per share analysts had been expecting.
