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Facebook profits from mobile advertising Facebook profits from mobile advertising
(about 4 hours later)
Facebook's revenues grew 38% to $1.46bn (£938m) in the first quarter from the same period a year ago, boosted by a jump in advertising revenue, the company has reported. Facebook has reported a jump in mobile advertising revenue, easing investor concerns over its future growth.
Advertising revenue was up 43% to $1.25bn, of which 30% came from mobile advertising. There have been doubts over Facebook's ability to sell adverts on mobile devices, not least due to their small screen size. Investors had feared that its growth may be hurt as a result.
Net profit rose to $219m from $205m a year earlier. However, Facebook said 30% of its $1.25bn (£803m) advertising revenue in the first quarter came from mobile.
"We've made a lot of progress in the first few months of the year," said founder Mark Zuckerberg. It reported a net profit of $219m for the January to March quarter.
The social networking site said its monthly active users were up 23% year-on-year to 1.11 billion. "We've made a lot of progress in the first few months of the year," said Facebook's founder Mark Zuckerberg.
That included 751 million mobile users, a rise of 54% on the year. But increased spending on infrastructure, together with the fact the firm now employs more people than it did a year ago, contributed to a 60% jump in costs and expenses to $1.1bn in the quarter.
The comparative figures from last year were from when Facebook was still a private company. 'They are delivering'
It went public in May 2012 in a high-profile flotation. Ever since its launch, Facebook has enjoyed tremendous growth and has gone on to dominate the social networking sector.
Higher costs However, an increasing number of users are accessing the site on their mobile devices such as smartphones and tablet PCs.
Facebook has rolled out new and revamped features and products in recent months. The screens of these gadgets are much smaller compared with traditional PCs or laptops. That had led to concerns that Facebook may find it tough to sell advertising space on these and turn its online dominance into profits.
For instance it has overhauled its newsfeed and search feature, and launched Facebook Home, an app for Android phones. These concerns have hurt the firm's share price ever since its high profile initial public offering (IPO) last year.
However, analysts said the latest numbers indicate that the firm is keeping up with changing patterns.
"They are making the transition to mobile faster than anyone anticipated," said Arvind Bhatia, an analyst with Sterne Agee. "It seems like they are delivering."
According to Facebook, it generated mobile advertising revenue of almost $375m, during the period, up from nearly $330m in the previous three months and approximately $150m in the three months to 30 September 2012.
'In full force'
Facebook also reported an increase in users who access Facebook every day, these, on average, rose 8% from December to 655 million in March.
That had been another area of concern for investors, amid talk of so-called "Facebook fatigue" among users.
Analysts said the numbers indicated that the site continued to remain popular.
"The network remains in full force,'' said Brian Blau, an analyst with Gartner. "You have to give them a lot of credit.''
For its part, Facebook has taken various steps in recent months to make sure it keeps its dominant place in the sector.
It has overhauled its newsfeed and search feature, and launched Facebook Home, an app for Android phones.
The app, which effectively replaces the phone's home screen with a Facebook feed and chat options, has received mixed reviews from users.The app, which effectively replaces the phone's home screen with a Facebook feed and chat options, has received mixed reviews from users.
The increased spending on infrastructure, together with the fact the firm now employs more people than it did a year ago, contributed to a 60% jump in costs and expenses to $1.08bn in the quarter. Some analysts said that the firm had managed to fend off competition in the sector.
Its shares were down 1.22% in after hours trading. "There is always going to be something new in social," said Nate Elliot of Forrester Research.
"The question is how much of it is a threat to Facebook? All Facebook can do is keep those users coming back and make money off those users.
"And Facebook seems to be doing both of those things reasonably well."