Those concerns were silenced a bit on Wednesday, when Facebook’s earnings report offered early signs that the company was cracking the mobile revenue code.
In the first three months of the year, the company’s mobile advertising generated $375 million in revenue, exceeding what analysts had expected. Mobile revenue accounted for 30 percent of the company’s advertising revenue in the first quarter of this year, compared with 23 percent in the same period last year.
“What we have seen has made us more confident we can do more with advertising over time,” the company’s chief executive and co-founder, Mark Zuckerberg, told analysts on an earnings call on Wednesday. He said one of his top goals was to build “the best mobile product” — and make money from it.
Despite the strong mobile numbers, investors did not extol the company on Wednesday, largely because it continues to spend a lot of money to develop new features. The company’s shares fell about 1 percent, closing at $27.43, before the earnings were reported. Facebook shares swung up and down in after-hours trading but ended at $27.51.
Just last year, Mr. Zuckerberg said that Facebook was late in retooling itself for the mobile era. At Facebook headquarters, morale-raising posters went up on the walls screaming “Our Mobile Future.”
Since then, Facebook has introduced more than a half-dozen advertising products. They include what are called app-install ads, which are meant to help app developers draw new customers and more refined advertising tailored to consumers’ online and offline behavior.
Facebook has recently partnered with third-party data companies that track who buys soda at the supermarket and who is planning to buy a car in the next six months.
Facebook executives said the company planned to hone its targeting even more.
Two-thirds of Facebook’s 1.1 billion users across the world log into the site on their phones, the company said Wednesday, accounting for what executives described as strong growth in populous countries like India and Brazil.
For those mobile users, the changes mean more ads when they log in on their cellphones and eventually more finely targeted ads. And they mean a redesigned News Feed, a feature introduced in March, that offers marketers a chance to show off pictures and bigger and more prominent links.
“We want content in ads that’s as good as content from a friend or somewhere else on the site, as well as to have a higher return for marketers,” said Sheryl Sandberg, the company’s chief operating officer. “Those go hand in hand. What you’ll see from us is better targeting.”
All told, revenue increased 38 percent, to $1.46 billion, exceeding the $1.44 billion estimate of financial analysts surveyed by Bloomberg News. The company had $219 million in net income. It reported a profit of 12 cents a share, missing the average estimate by a penny.
“Over all, they’re on track,” said Aaron Kessler, an analyst with Raymond James. “They’re still rolling out new products for advertisers. They’re definitely more focused on creating shareholder value and driving revenue growth.”
In early April, the company introduced mobile software for Android phones called Facebook Home that is intended to nudge Facebook users to return to their mobile News Feeds even more frequently than they do now.
The new suite of applications effectively turns the News Feed into the screen saver of a smartphone, updating it constantly with Facebook posts and messages. It appears to be only a matter of time until the company introduces ads there.
Last May, Facebook held a widely publicized initial public offering of stock, at a price of $38 a share. Its fairy tale rise took a sharp dive almost immediately, resulting in lawsuits and angry recriminations. Its shares slumped to half the opening price at one point last fall, and they have inched up cautiously since then.
On Wednesday, Facebook filed a motion asking a federal judge to dismiss a lawsuit that accused the company of misleading investors about its financial strategy before the public offering, Reuters reported. The company said in court papers that it was not legally obligated to disclose publicly how mobile adoption would affect its financial performance in the future.
Wall Street analysts have watched closely for signs of Facebook fatigue among users. In the first quarter, they point out, fewer monthly users returned to Facebook on their desktop computers in the United States and Europe, according to comScore figures.
Analysts worried whether that meant that users in more mature and lucrative markets were getting bored with Facebook. But they noted that the figures applied only to desktop users and revealed little about mobile users of Facebook.
Article source: http://www.nytimes.com/2013/05/02/technology/mobile-efforts-help-propel-facebook-earnings.html?partner=rss&emc=rss
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