Facebook finally cracks how to make money from mobiles
Published 29/01/2014 | 22:53
Facebook shares surged nearly 12pc in after-hours trading after the company finally revealed it has cracked how to make money out of mobile users.
The company, which will celebrate its 10th anniversary next week, saw revenues surge 55pc to $7.87bn in 2013, accelerating sharply towards the end of the year as more advertisers paid for adverts on its mobile website.
Sales jumped 77pc to $2.6bn in the fourth quarter, including more than $1bn from advertising on mobile phones. Profits grew more than seven-fold to $523m in the fourth quarter, bringing annual profits to $1.5bn.
The performance marks a dramatic reversal of fortunes for Facebook, which floated in May 2012 and spent its first year as a public company struggling to work out the best way to monetise mobile users effectively.
The social network plummeted in value in the weeks following its flotation and only recovered its $38 IPO price late last year.
However, on Wednesday, shares soared to close to $60, as the results reassured investors that the company will continue growing.
“We are in the early days of capilatising on a significant opportunity,” said David Ebersman, chief financial officer. “Mobile continues to drive our growth. When we began 2013, we had more daily users on desktop than on mobile. By the end of the year, the number of users on mobile outnumbered desktop by around 200m.”
Sheryl Sandberg, chief operating officer, added: “It is our first billion dollar mobile quarter. In fact, our Q4 ad revenue from mobile was nearly as large as our total ad revenue in Q4 last year.”
Mobile ads accounted for 53pc of advertising revenue, compared with 49pc the previous quarter.
The company received a particular boost on Black Friday, the day after Thanksgiving in America and traditionally biggest shopping day of the year. “When people shop, they’re on their phones, and while their on they’re phones, they’re on Facebook,” Ms Sandberg said.
The company also doubled the number of users of Instagram, the photo-sharing website Facebook bought for $1bn in 2012. However, Facebook warned that it would move slowly in introducing advertising on the service.