Facebook once again exceeded
analyst projections in its latest quarterly earnings report Wednesday, as the
world’s largest social network continued to show investors it can transition
its advertising business to mobile devices.The company generated $2.5 billion in revenue and had earnings
(minus some line items) of 34 cents per share in the first quarter of 2014,
greatly topping analyst estimates of $2.36 billion in revenue and 24 cents per
share in profits. Net income for the quarter was $642 million, triple the
figure from the same quarter last year. Facebook shares rose only slightly on
the strong earnings in after-hours trading.The social network said it gained
about 50 million new monthly active users in the quarter, increasing its total
to 1.28 billion. Daily active users now total 802 million, up from 757 million
in the previous quarter. In a key milestone, mobile monthly active users also
crossed the one-billion mark for the first time. Mobile ads are quickly
increasing in value for the company and now generate almost 60 percent of
Facebook’s total ad revenue.“These results show Facebook’s business is strong
and growing,” CEO Mark Zuckerberg said in a conference call with investors.
Despite early doubts when Facebook first
went public in 2012, the company has now proven that it can have a mobile-first
mindset and profit handsomely from it. The next challenge for the social
network will be growing its business outside of the Western world. Nearly two
thirds of Facebook’s users now reside in places besides the U.S., Canada or
Europe, but the revenue it generates per user is more than six times greater in
the United States than Asia. Some of Facebook’s moves early this year, like
purchasing messaging platform WhatsApp for $19 billion and announcing plans to
beam Internet access to people in remote areas via drones, seem directly aimed
at shoring up revenues in these non-Western markets in the long term.Though
Facebook is making several long term bets, including the purchase of virtual
reality startup Oculus VR for $2 billion in March, the company is content to
let its main website do the heavy lifting of generating profits for now.
Zuckerberg and Chief Operating Officer Sheryl Sandberg both stressed that
acquisitions like WhatsApp and Instagram won’t be monetized heavily anytime
soon. Neither will internal Facebook products like the Paper news reading app
and the new auto-play videos that now appear in users’ News Feeds. “The current
priority is growth,” Zuckerberg said of Facebook’s suite of apps and services.
He pointed to 100 million users as a threshold to cross before developing an
app into a significant business.
