Mark Zuckerberg, Facebook's co-founder and chief executive. The social media company reported a 60-percent rise in revenue for the third quarter as a result of more mobile ad sales. The stock rose as much as 15 percent in after-hours trading on Wednesday.
Facebook topped Wall Street's sales targets on Wednesday, as robust growth in its mobile advertising business drove a 60 percent increase in revenue.
Following the earnings beat, shares shot up 15 percent in after-hours trading before dropping back below their closing price.
"Investments made over the last couple years are paying off," said Facebook Chief Financial Officer David Ebersman. He said the results are seen in growing mobile usage and product development. "Most important thing driving our business are newsfeed ads."
In the third-quarter net income rose to $425 million, or 17 cents a share, from a loss of $59 million, or 2 cents a share, in the last year's quarter, the social network company said.
Excluding items, the company earned $621 million, or 25 cents per share, from $311 million, or 12 cents a share, in the year-earlier period. Revenue jumped 60 percent to $2.02 billion from $1.26 billion a year ago.
Analysts had expected the company to report earnings excluding items of 19 cents a share on $1.91 billion in revenue, according to a consensus estimate from Thomson Reuters.
During the quarter, mobile monthly active users jumped 18 percent to 1.19 billion from the year-ago period, Facebook said.
Revenue from advertising increased 66 percent to $1.8 billion. Non-GAAP operating margin rose to 49 percent, from 42 percent last year.
Revenue from mobile ads, which appear on smartphones, represented 49 percent of Facebook's total advertising revenue in the third quarter, or roughly $880 million. Mobile ads generated roughly $150 million in the year-ago period, when Facebook was just beginning to develop its mobile ad business.
The issue of advertising was one area of criticism from investors who were disappointed with the weak performance of Facebook's shares after its initial public offering in May 2012. The stock was launched at an IPO price of $38 and slipped as low as $20 in August last year. But it has risen this year and closed on Wednesday at $49.01. In after-hours trading following the earnings release, it rose as much as 15 percent before suddenly falling to $47.40, down 3 percent from its $49.01 closing price.
(Reuters contributed to this report)
First published October 30 2013, 3:32 PM