Facebook Swings To Profit On Strong Mobile Ad Revenues; Shares Surge

(RTTNews) - Facebook Inc. (FB) Wednesday posted a third-quarter profit turning around from a loss last year, driven largely by higher revenues and better margins. Earnings for the quarter easily trumped Wall Street's expectations, as did revenues.

Shares of the social networking giant rose 9 percent in the extended hours, after reporting a significant improvement in mobile ad revenues.

Facebook's revenues for the third-quarter soared 60 percent to $2.02 billion from $1.26 billion last year. Analysts expected revenues of $1.91 billion for the quarter.

Facebook's ad revenues surged 66 percent to $1.80 billion.

In the previous quarter, Facebook was able to successfully improve its mobile ad revenues. Since Facebook's IPO days, analysts had raised concerns about its ability to grow ad revenues as several users preferred to log in through smartphones rather than desktops. Investors were worried whether the company would be able to generate enough money from mobile advertising.

Nonetheless, Facebook's mobile ad revenues for the third quarter represented about 49 percent of advertising revenues, up from about 41 percent in the previous quarter, and a massive jump from 14 percent a year ago.

At the end of the third quarter, Facebook had 1.15 billion of monthly active users, an increase of 18 percent, while mobile monthly active users surged 45 percent to 874 million. Daily active users rose 25 percent to 728 million.

Menlo Park, California-based Facebook reported third-quarter profit of $425 million or $0.17 per share, compared to a loss of $59 million or $0.02 per share last year.

Adjusted earnings improved to $0.25 per share from $0.12 per share. On average, 38 analysts polled by Thomson Reuters expected earnings of $0.19 per share for the quarter. Analysts' estimates typically exclude special items.

Operating margin advanced to 37 percent for the third quarter from 30 percent last year.

Commenting on the result, Chief Executive Mark Zuckerberg said, "For nearly ten years, Facebook has been on a mission to connect the world. The strong results we achieved this quarter show that we're prepared for the next phase of our company, as we work to bring the next five billion people online and into the knowledge economy."

FB closed Wednesday's trading at $49.01, down $0.39 or 0.78%, on the NYSE. The stock, however surged $4.79 or 9.77%, in the after-hours trade.